A difference in wage rates that results from a difference in working conditions
A)is known as a compensating wage differential
B)is known as an equalizing differential
C)reflects a difference in marginal productivity
D)reflects job-market discrimination
E)will be eliminated if all labor markets are perfectly competitive

Question

Quizplus · Accepted Answer

A difference in wage rates that results from a difference in working conditions is known as a compensating wage differential. This means that workers will demand higher wages to compensate for the negative aspects of their job, such as dangerous working conditions or a lengthy commute. In a competitive labor market, employers will need to offer higher wages to attract workers to these less desirable jobs.

A Difference in Wage Rates That Results from a Difference