The wage distributions for three occupations in the Pennsylvania food services industry are provided below.
Percentile 10% 25% 50%(Median) 75% 90%
Chefs and Head Cooks Hourly Wage $11.62 $14.94 $20.43 $27.71 $35.69
Fast Food Cook Hourly Wage $7.82 $8.30 $8.88 $9.50 $11.28
Waiters and Waitresses Hourly Wage $7.84 $8.30 $8.94 $10.22 $14.33
a) Consider the wage differentials across occupations. How do they compare to the prediction of the Law of One Wage? With respect to your answer, which of the five assumptions of the Law of One Wage do you think is most flawed?
b) Consider the wage differentials within occupations. How does the distribution of chefs and head cooks compare to the distribution for fast food cooks? Why do you think they are so different? Compare the distribution for fast food cooks relative to waiters and waitresses. Comment on the differences or lack thereof.