Ability bias can arise when estimating compensating wage differentials associated with various job characteristics. What is ability bias in this context?

A. High-skilled workers are likely to have higher wages than unskilled workers but to have worse job amenities.
B. High-skilled workers are likely to have higher wages than unskilled workers, but they are also likely to trade some of their higher wages for better job amenities.
C. High-skilled workers are likely to have lower wages than unskilled workers but to have better job amenities.
D. Low-skilled workers are likely to have low wages but good job amenities.
E. High-skilled workers are likely to have high wages but poor job amenities.


Answer: B

Economics

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