The compensating wage differential shows a labor supply curve for a risky occupation located to the ____ of the labor supply curve for a less risky occupation. If the differential is too low, a ____ would prevail in the risky occupation.

Question

Quizplus · Accepted Answer

The compensating wage differential is the difference in wages between two jobs that are equally desirable except for the level of risk involved. If the differential is too low, then more people will be willing to work in the risky occupation than there are jobs available, resulting in a surplus of labor and a shortage of jobs.

The Compensating Wage Differential Shows a Labor Supply Curve for a Risky