Mankiw's Principles of Microeconomics Chapter 19

Post three of your "margin notes" from your reading of the chapter to your blog.  Why did you make the comment you made in the margin?  What did you find confusing, useful, or important about the passage you commented on?

Margin note #1:
The value of a worker’s ability: Unskilled labor vs. skilled labor

When we consider equilibrium wages in a global economy, we can’t just look at the workforce in our own country; we must consider the workers in every country. Many of the jobs that have been outsourced require unskilled labor. Why is that, and does it make sense? Keep in mind that when it comes to trade, the country that will benefit will be the one that has the comparative advantage. Since labor is a major cost of production, firms will outsource this cost at the cheapest wage since as the human capital required is low and training on the task is relatively easy.

Margin note #2:
Street smarts vs. Book smarts

The true value of an education cannot be underscored. Today’s businesses seek individuals with highly educated backgrounds because those workers usually contribute to a higher marginal product. With that said employers who hire workers with higher education levels don’t always get the brightest bulbs in the lantern because book smarts are much different than real world experiences. While a firm that chooses to hire an applicant with a college degree may not get an immediate boost of production out of that new hire, signal theory sets out to prove that the graduate/new hire is capable of completing long term objectives that require a consistent ability to think critically.

Margin note #3:
Employer Discrimination: Intentional or not, it all reflects the same

Employer discrimination is a highly debated topic. While some will argue that it is as rampant as ever in today’s job market, others will contend that when you expand on the data, employer discrimination is a hard case to prove since the compensating differentials between sexes, races, or religions vary so much. Either way, one point that remains hard to argue is the effects of discrimination on competitive markets. I found the specific example about blonds and brunettes interesting. If an employer decided to pay brunettes more than blonds, yet the skill sets between the two hair colors were the same, a smart competitor would hire blonds at a lower wage thereby reducing their costs of production and increasing their profit. Over time the discriminatory firm would fall victim to the firm with the lower costs of production. This proves the point that profit prevails over discriminatory practices.