American workers in Iraq earn hazard pay. This is an example of a compensating differential.

Question

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A compensating differential refers to the additional amount of income that a worker receives for performing a job that has undesirable attributes, such as danger or unpleasant conditions. Hazard pay for American workers in Iraq is an example of this, as it compensates them for the increased risk associated with working in a potentially hazardous environment.

American Workers in Iraq Earn Hazard Pay