Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home is an example of
A)a human capital differential.
B)a compensating differential.
C)signaling theory.
D)the superstar phenomenon.

Question

Quizplus · Accepted Answer

The higher wage offered by the funeral home is an example of a compensating differential, which means that the higher pay is offered to compensate for the unpleasant or undesirable aspects of the job. In this case, the job at the funeral home may not be as pleasant as working at a regular hair salon, hence the higher pay is offered as compensation. Therefore, Callie should choose the job at the funeral home if she's okay with the nature of the work.

Callie Has Just Graduated from Hairs-R-Us Beauty School with a License