Bob and Rob are identical twins who attended grammar school through college together.Bob took a job as an engineer who must travel out of state once a week.Rob took a job as an engineer who does not have to travel out of the state.Bob earns $100,000 a year,and Rob earns $85,000 a year.Select the best explanation for this wage difference.
A)Rob has more human capital relative to Bob.
B)Rob has less human capital relative to Bob.
C)Bob receives a higher wage to compensate for the disagreeable nature of business travel.
D)Bob's higher salary supports the signaling theory of education.

Question

Quizplus · Accepted Answer

Bob's higher salary compensates for his need to travel for work, which is often considered inconvenient and disruptive to personal life. This is known as a compensating wage differential.

Bob and Rob Are Identical Twins Who Attended Grammar School