Both Lee and John have got a business degree from a university.They both got jobs as research analysts in the same firm.Two years later Lee is earning more money than John.This wage difference is likely caused by:
A)discrimination by the firm
B)differences in work experience
C)regulations in the labour market
D)compensating differentials

Question

Quizplus · Accepted Answer

Compensating differentials refer to differences in wages due to differences in job characteristics such as risk, unpleasant working conditions, or long hours. It is likely that Lee's job duties have more compensating differentials than John's, resulting in a higher wage. Discrimination by the firm or regulations in the labor market are unlikely to be the main causes of the wage difference as both Lee and John have the same degree and job position. Differences in work experience may be a factor but are not mentioned in the scenario.

Both Lee and John Have Got a Business Degree from a University.They