1 There are three major sources of wage differentials among individuals: differences in workers, differences in jobs, and degree oflabor mobility. Individual workers differ with respect to productivity (skills, human capital, motivation, native ability, and so on), specialized skills, employment preferences, race, and sex. All these factors influence either the demand for or the supply of labor. In addition, differences in nonpecuniary job characteristics, changes in product markets, and institutional restrictions that limit labor mobility contribute to variations in wages among workers.