1. There are three major sources of wage differentials among individuals-differences in workers, differences in jobs, and lack of labor mobility. Individuals 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, dynamic changes in product markets, and man-made restrictions that limit labor mobility contribute to variations in wages among workers.