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
You might also like to view...
A good is path dependent when
A) it can only be used in one way. B) people who move location follow the path of people who moved before them. C) consumers get utility from consuming goods that others are consuming, such as restaurants. D) the first technology that was adopted has an advantage over a better technology that came later.
A bank will be able to make fewer loans if it
a. sells bonds to the Fed b. calls in loans c. increases loans from excess reserves d. borrows money in the federal funds market e. buys bonds from the Fed
Which theories of the economy lead to the assertion that markets "self-adjust" to deviations from their long-term growth trend?
A. Keynesian theories B. Monetarist theories C. Classical theories D. Supply-side theories
The central question in economics is how to:
A. deal with the problem of scarcity. B. change government economic policy. C. change people's wants to match their needs. D. manage money and become wealthy.