Ability bias can arise when estimating compensating wage differentials associated with various job characteristics. What is ability bias in this context?
A) Low-skilled workers are likely to have low wages but good job amenities.
B) High-skilled workers are likely to have high wages but poor job amenities.
C) High-skilled workers are likely to have lower wages than unskilled workers but to have better job amenities.
D) High-skilled workers are likely to have higher wages than unskilled workers but to have worse job amenities.
E) High-skilled workers are likely to have higher wages than unskilled workers, but they are also likely to trade some of their higher wages for better job amenities.
Correct Answer:
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