One implication of the theory of compensating differentials is that jobs in states with high income tax rates are likey to
A)be associated with more fringe benefits.
B)be associated with fewer fringe benefits.
C)pay the same wage and offer the same fringe benefits package as the same jobs in lower-tax states.
D)have worse working conditions.
E)be seasonal in nature.

Question

Quizplus · Accepted Answer

The theory of compensating differentials suggests that workers will demand higher wages or better fringe benefits to compensate for negative aspects of a job, such as high income taxes in a particular state. Therefore, jobs in states with high income tax rates are likely to be associated with more fringe benefits to offset the lower net pay received by workers after taxes.

One Implication of the Theory of Compensating Differentials Is That