Answer to Question #98951 in Macroeconomics for annie

Question

Choose two occupations. Write which one should pay more according to the mainstream labor
market model and why. Explain your answer. (Your prediction may contradict with actual wage rate between those occupations. As long as your explanation is good enough, your answer will be OK.)

Answer 1

Considering a doctor and a teacher, being a doctor should pay more than teaching. The demand for qualified doctors from the universities is higher because very few people study medicine. On the other hand, many teachers graduate from universities and colleges hence the demand for teachers is low because they are crowded in the labour market. Therefore, the supply of teachers is higher than supply of doctors. Because the supply of teachers in the labour market is high, according to the mainstream labour market model the wages of teachers will be lower and the vice versa happens to the doctors.