Construction work is much riskier than working as a server at a restaurant. As a result, we'd expect a difference in wages between the two jobs. The difference is known as
A)an efficiency wage.
B)a compensating differential.
C)a wage adjustment.
D)a minimum wage.

Question

Quizplus · Accepted Answer

The difference in wages due to the varying levels of risk or other job characteristics is known as a compensating differential. This concept explains why riskier jobs, like construction work, often pay more than less risky jobs, such as serving at a restaurant, to compensate for the additional risks or discomforts associated with the job.

Construction Work Is Much Riskier Than Working as a Server