Traci is a nurse, and she gets paid an additional $1.00 per hour for agreeing to work the night shift. Carol is also a nurse, but she works the day shift and does not get paid this extra dollar per hour. This difference in pay is an example of a compensating differential.

Question

Quizplus · Accepted Answer

A compensating differential refers to the difference in wages meant to offset the desirability or undesirability of a job attribute, such as working hours. In this case, the extra $1.00 per hour for the night shift compensates for the less desirable aspect of working at night.

Traci Is a Nurse, and She Gets Paid an Additional