Sam and Bob have the same educational background. Both have been policemen in Memphis for 10 years. Sam works from 11 P.M. until 7 A.M., and Bob works from 7 A.M. until 3 P.M. Sam's salary is $800 per month higher than Bob's salary. This is an example of a wage disparity due to:
A) efficiency wages.
B) market power.
C) compensating differentials.
D) discrimination.

Question

Quizplus · Accepted Answer

Compensating differentials refer to differences in wages that arise to compensate workers for non-monetary aspects of different jobs, such as working night shifts, which is likely why Sam earns more.

Sam and Bob Have the Same Educational Background