Workers on the night shift at a factory earn more per hour than workers on the day shift, although their human capital and productivity are the same. This is an example of:
A)discrimination based on time preferences.
B)irrational decision making by an employer.
C)a compensating differential.
D)an efficiency wage.

Question

Quizplus · Accepted Answer

A compensating differential is a difference in wages that compensates workers for the non-monetary costs of a particular job, such as working at night or in dangerous conditions. In this case, the workers on the night shift are compensated with higher wages to compensate for the inconvenience of working during nighttime hours. It is not discrimination or irrational decision making by the employer, nor is it an efficiency wage since the productivity of workers on both shifts is the same.

Workers on the Night Shift at a Factory Earn More