Question

A basic finding of labor economics is that workers who have more experience in the labor force are paid more than workers who have less experience (holding constant the amount of formal education). Why might this be so? Some studies have also found that expe- rience at the same job (called job tenure) has an extra positive influence on wages. Explain why this might occur.

Answer 1

Answer - The workers who have greater experience have the greater knowledge about the organisation and the business tactics. They are well aware of the production strategies and have greater amout of adaptability to the business environment. With more experience , they are also able to serve as leaders.

The level of productivity and efficiency increases as more time is spent in the same organisation. Lesser chances of mistakes are there. Hence all these factors leads to the greater amout of wages of experienced employess.