Scenario: There are two regional labor markets in a country, X and Y. Workers are equally qualified to perform the same type of job in either region. The labor demand in both markets is identical.
-Refer to the scenario above.If in equilibrium the wage in X is greater than the wage in Y,what can explain this wage difference?

Question

Quizplus · Accepted Answer

Differences in compensating wages could explain the wage difference between the two markets, as workers may require a higher wage to compensate for factors such as higher cost of living, unfavorable working conditions, or social amenities that may be more desirable in one region versus the other.

Scenario: There Are Two Regional Labor Markets in a Country