One implication of the theory of compensating differentials is that jobs in states with high income tax rates are likely to
A) be associated with more fringe benefits.
B) be associated with fewer fringe benefits.
C) pay the same wage and offer the same fringe benefits package as the same jobs in lower-tax states.
D) have worse working conditions.
E) be seasonal in nature.

Question

Quizplus · Accepted Answer

The theory of compensating differentials suggests that jobs in areas with less desirable characteristics (such as high income tax rates) may offer higher wages or more fringe benefits to compensate for these drawbacks. In this case, more fringe benefits could be offered to offset the disadvantage of a high tax rate.

One Implication of the Theory of Compensating Differentials Is That