A wage is payment, normally made under contract for the services of labour. Many great differences occur in wage rates. One important reason is that labour is not a homogenous factor. Each worker is a unique factor of production possessing a unique set of employment characteristics. Education, training and work experience are also important characteristics in labour. The ability of the workforce to perform tasks including how hard they are prepared to work, their strength and their manual or mental dexterity will also vary. Because of the variation in employment characteristics of labour, the wages that they are paid tend to show great differences. The variations in conditions of supply and demand in the labour market give rise to different prices, hence the existence of wage differentials.
According to market theory, wage rates would be the same if all labour was homogenous and all jobs possessed the same characteristics. However, in the real world, the tasks involved in jobs and the working hours in different occupations are not identical. The marginal revenue product curve for each type of job is different.
The Super Bowl football players have been ?pocketing nearly 70% of most revenues' because of a number of reasons. The main hypothesis behind this is the theory of economic rent.
The term ?economic rent' means: ?payment to a factor of production over and above its transfer earnings'. The theory can be applied to any factor of production. With the situation regarding the well-paid footballers-, they are considered ?celebrities' and in the entertainment and sporting industries, fans and followers come from along distance to see a certain person. The supply of the ?certain person' is inelastic. There is fixed supply. Based on the inelasticity of ...