In searching for empirical evidence of the existence of compensating differentials, all of the following problems are potentially an issue except:
A) the wage-safety locus problem
B) omitted variable bias in the wage equation
C) error-in-variables problems for the risk variable
D) simultaneous equation bias problem
E) sample selection bias for the wage equation

Question

Quizplus · Accepted Answer

The wage-safety locus problem is not an issue in searching for empirical evidence of the existence of compensating differentials. The other options (B, C, D, E) represent common econometric problems that can affect the identification and estimation of compensating differentials, such as biases and errors in variables.

In Searching for Empirical Evidence of the Existence of Compensating