Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the
A)higher-paying job has a compensating wage differential of $3 per hour.
B)higher-paying job has a compensating wage differential of $25 per hour.
C)higher-paying job is intrinsically more attractive than the lower-paying job.
D)factory is discriminating against Sally because she is a woman.

Question

Quizplus · Accepted Answer

The fact that Sally and Harry have the same job, experience, and level of education but receive different wages suggests that there is a compensating wage differential at play. This means that the higher-paying job (i.e. the night shift) compensates for the less-attractive working hours with a higher wage. The difference in pay between Sally and Harry represents this compensating wage differential of $3 per hour. There is no evidence to suggest that the factory is discriminating against Sally because of her gender.

Sally and Harry Both Work at the Local Factory Producing