How can compensating differentials explain differences in wages across jobs in different industries?
What will be an ideal response?
A compensating differential is the difference in wage that a worker will accept as compensation for a job with additional amenities, such as a better office. Other factors being the same, some workers may be willing to accept a lower wage in return for certain job attributes like an air-conditioned office or a great view. Becausejobs in different industries have different attributes, compensating differentials could explain why wages also differ across industries.
A-head: ECONOMIC TOOLS TO VALUE HUMAN LIFE
Concept: Compensating differentials
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