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What is the hedonic theory of wage differentials? Combine isoprofit curves with worker indifference curves to...

What is the hedonic theory of wage differentials? Combine isoprofit curves with worker indifference curves to explain how two workers with identical stocks of human capital might be different wage rates.

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Expert Solution

A hedonic wage function reflect the relationship between wages and job characteristics. It matches workers with different risk preferences with firms that can provide jobs that match these different risk preferences.

the difference in wages between workers with different skills in the same industry or between those with comparable skills in different industries or localities.

The maximum compensating wage that will be offered in the market for the different levels of safety Therefore it is the outer limits of the two iso profit Therefore, it is the outer limits of the two iso profit curves

Rahul Sunny answered 1 year ago
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