Which of the following is an example of compensating differentials affecting wages?
A)a lawyer receiving a higher wage than a cleaner as the supply of lawyers is less than the supply of cleaners
B)a highly educated civil engineer receiving a higher wage than his peers as she has a higher value of marginal product of labour
C)a doctor foregoing $100 000 in income to volunteer in a developing country
D)workers who work nightshift being paid the same as workers who work during the day

Question

Quizplus · Accepted Answer

Compensating differentials refer to the differences in wages that arise to compensate workers for the desirability or undesirability of a job. In choice C, a doctor choosing to volunteer in a developing country for less pay is an example of accepting lower compensation for non-monetary benefits or personal fulfillment, which aligns with the concept of compensating differentials.

Which of the Following Is an Example of Compensating Differentials