There are several reasons why wages may differ between individuals, occupations, industries, and regions. Supply and demand factors influence wages, as some professions like barristers have limited supply and long qualifications, making them difficult to substitute. Government policy, such as minimum wage laws, and union activity can also impact wages. Discrimination based on characteristics like gender and ethnicity can cause labor market failures and unequal treatment. For example, women on average earn 60% of what men earn in the city described and face a 39% gender pay gap. Ethnic minorities also face discrimination through lack of access to higher-paying occupations and lower pay within jobs.

1. Wage Differentials Differences in wages arising between individuals, occupations, industries, firms and regions.

3. Demand & Supply for skilled and unskilled professions Wage Rate Quantity of workers Skilled workers Unskilled workers Skilled workers tend to have lower supply and are harder to replace with other factors such as machinery. This results in higher wages. Unskilled workers are more available resulting in greater supply and therefore lower wage. The amount of training required for a profession like this is limited. WS WU QS QU

6. MRP 1 MRP 2 (discrimination) W1 W2 Q1 Q2 Sex discrimination in the labour market Many employers feel the MRP of females is lower than it should be as they may take maternity leave. Wage Rate Quantity of workers