Explain Competence-Based Pay Including Its Advantages and Disadvantages

question 111

Essay

Explain competence-based pay including its advantages and disadvantages. Include in your discussion the practice of broadbanding.

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Definitions:

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is achievable but is not achieved.

Vertical Equity

The principle that taxpayers with higher incomes should pay more in taxes than those with lower incomes.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the percentage of additional income that is paid in tax.

Efficiency

The optimal use of resources to achieve the best possible outcome or output with minimal waste.