Question

Which of the following is not an example of a compensating differential? 

a. paying workers who do dull, boring work higher wages than workers who do fun, interesting work, all else equal 

b. paying workers who work on the night shift higher wages than workers who work the day shift, all else equal 

c. paying workers who do more dangerous work higher wages than workers who do less dangerous work all e se equal 

d. paying workers with PhDs higher wages than workers with BAs, all else equal

Answer 1

A compensating differential is when a higher wage is paid to a worker in order to compensate him for the unpleasant aspects of the given job or to compensate them for the undesirable job due to higher skill sets.

The following is not an example of compensating differential:

Paying workers who do dull boring work higher wages than workers who do firm and interesting work all else equal.