Asked by
Stuti Agrawal
on Nov 16, 2024Verified
Gerald earns a higher salary than his brother Peter because Gerald went to law school and is a lawyer, whereas Peter dropped out of college to work as a mechanic. The difference in salary illustrates a compensating differential.
Compensating Differential
The difference in wages that arises between jobs with differing levels of risk, convenience, or other non-monetary characteristics, compensating for the less desirable aspects of certain jobs.
Law School
An institution specializing in legal education to prepare students for careers in law.
- Understand the function of compensating differentials within the labor market.
Verified Answer
EH
Learning Objectives
- Understand the function of compensating differentials within the labor market.