People who grew up in the western part of Aquilonia have an accent distinct from people who grew up in the eastern part of the country. People from the west also receive lower wages than people from the east. From this information alone, we can conclude that it is possible that
A)discrimination against people from the west exists.
B)people from the east receive compensating differentials.
C)people from the west have lower levels of human capital.
D)All of the above could be correct.

Question

Quizplus · Accepted Answer

All three options are possible explanations for the observed differences. Discrimination could explain the wage differential between east and west if employers in the east have a preference for workers from their own region. Compensating differentials could explain the wage differential if working in the east has some non-monetary advantage (e.g. better working conditions or job opportunities) that compensates for the lower wage. Lower levels of human capital in the west could also explain the wage differential if workers there have less education or training than those from the east. Therefore, all three options could be correct.

People Who Grew Up in the Western Part of Aquilonia