If a person who works in coal mine gets paid more than a person with a similar background and skills who works in a safer job, then ?
Correct answer: B. we have observed a compensating differential
- A. coal miners must have greater human capital than others
- B. we have observed a compensating differential
- C. coal miners must be more attractive than other workers
- D. we have evidence of discrimination against workers outside the coal mine
Explanation
Extra pay for an unpleasant or risky job is a compensating differential, which compensates workers for accepting worse working conditions. It does not by itself prove greater ability or discrimination.
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