The Concise Encyclopedia of Economics


by Steven E. Rhoads
About the Author
[Editor's Note: This article is not available online.]

About the Author

Steven E. Rhoads is a professor of government and foreign affairs at the University of Virginia.

Further Reading

Why Repairmen Earn More Than Child-Care Workers

Child-care workers perform important work. The total utility of their work is probably much higher than the total utility of the work performed by workers who repair air conditioning. So why do air-conditioning repairmen earn more than child-care workers? Marginalism has the answer. Suppose that there are fewer children and more air conditioners than there used to be. Suppose also that for the same wage there is a surplus of child-care workers and a shortage of people who repair air conditioners. Then the wage cannot be the same. If it were, the only way to get enough air-conditioning repairmen would be to conscript them. So the only peaceful way to get the right number of child-care workers and the right number of air-conditioning workers is to let the market work. This means letting the higher supply of child-care workers drive down their wage and the lower supply of air-conditioning repairmen drive up their wage. Although the total utility of work performed by child-care workers exceeds the total utility of work performed by air-conditioning repairmen, the marginal value of the latter's utility exceeds the marginal value of the former's.


Return to top