A compensating differential refers to differences in pay due to
A)productivity levels of workers.
B)signaling differences of workers.
C)nonmonetary characteristics of jobs.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A compensating differential refers to the difference in pay that individuals receive for performing different jobs that have nonmonetary characteristics. The compensation differential is based on the differences in job characteristics that affect the desirability of the job to workers. This includes factors such as the level of danger involved in the job, the level of job flexibility, required education levels and skills, and the level of physical effort required. Productivity levels and signaling differences of workers may result in differences in pay as well but these are not the defining factors for compensating differentials.

A Compensating Differential Refers to Differences in Pay Due to