Compensating differences in wages
A) compensate workers for differences in their human capital.
B) reward workers differently based on differences in the desirability of jobs.
C) describe the tendency for the wages of all occupations to adjust to the median level.
D) do not exist if jobs have different nonmonetary characteristics.

Question

Quizplus · Accepted Answer

Compensating differences refer to the wage differences that exist between similar jobs that have different levels of desirability, such as jobs with inconvenient working hours or hazardous conditions. Compensation differences are intended to attract workers to less desirable jobs and to balance the labor market. They are not based on differences in human capital, and they can occur even if the jobs have similar non-monetary characteristics. Therefore, options A, C, and D are incorrect.

Compensating Differences in Wages