Individual differences in terms of physical abilities and mental abilities create wage differentials.

By threatening to limit the supply of labor, unions generate bargaining power, which they use to negotiate improved terms and conditions for covered employees, including wages.

Workers may be forced to take on lower wages as a result in imposed lower prices.

With a higher minimum wage, workers have more disposable income, which they can use to purchase goods and services. This has led to an increase in consumer spending, which has a positive impact on the economy.

Restrictions placed on how workers move around, either geographically or occupationally, can slow growth by making it more difficult for businesses to hire productive workers. At the same time, unrestricted labor can depress wages in certain industries and create unemployment.

Economic rent is the actual cost and so it is an essential part of the cost of production whereas transfer earning is the opportunity cost.