Which of the following is an example of a compensating differential?
A) Two workers with different undergraduate majors earn different salaries.
B) Two workers with different years of experience earn different salaries.
C) Two workers whose jobs entail different working conditions earn different salaries.
D) Two workers with different levels of personal attractiveness earn different salaries.

Question

Quizplus · Accepted Answer

A compensating differential is a difference in wage that compensates workers for the non-monetary attributes of different jobs. In this case, the two workers who have jobs with different working conditions are being compensated differently for the non-monetary attribute of working conditions. The other options do not involve compensating differentials - A and B involve differences in human capital or skill level, and D involves discrimination.

Which of the Following Is an Example of a Compensating