Based on what was
discussed yesterday, I think that in the most attractive industries and firms,
the labour market is oligopolistic and the firms have some degree of market
power. As long as there is no labour supply shortage, there is no reason for
these big firms to compete for these entry level labours. These large firms
often have similar wages; they do not need to meet in private and discuss what
levels of wages they agree to offer, the wage information is very open and they
can match their wage offers to each other.
There is a piece of
good news for those who are employed. Those who are employed are offered higher
wages than what they could get in a perfectly competitive labour market. This
may sound a bit strange to some people that the firms who have market power but
offer higher wages. However, by offering a higher wage level, it can
automatically produce an excess of supply in the market. The excess of supply
can give labours more incentives to work harder because the labours know they
can be replaced; they may not have proactive incentives to work harder, but
when they are asked to work longer or harder, they are much more likely to
accept these requests. Can they reject the requests? No, most of them will not
reject these requests. Because they do not want to lose the wages, or we can
say the high wages can compensate their longer working hours. However, the wage
is not the only reason, the opportunities that working for large firms can
bring are incredibly attractive. When they enter large firms, they become
easier to succeed in the future, the expected future incomes of working in a
large firm at the moment are higher than of working in a small firm, because of
the networks formed in large firms and opportunities that they may have.
Overall, it is just
inevitable for the workers in large firms to accept requests from their firms
since they are enjoying higher incomes and greater opportunities, though they
may have complains.
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