Typically, employees working in the natural resource sector tend to experience long periods of layoffs, while at the same time, they are paid higher compensation compared to other sectors that are less cyclical in nature. Which of the following terms best describes this phenomenon?
A) the supply/demand equilibrium
B) the union effect
C) compensation differential
D) wage compression

Question

Quizplus · Accepted Answer

Compensation differential refers to the difference in pay between workers in different sectors or industries, usually reflecting differences in skill requirements, working conditions, and risk of unemployment. In the natural resource sector, compensation tends to be higher to compensate for the risk of layoffs during downturns in the industry's cyclical nature. The other options, supply/demand equilibrium, union effect, and wage compression, do not accurately describe this phenomenon.

Typically, Employees Working in the Natural Resource Sector Tend to Experience