Differences in wages between highly educated workers and less educated workers are most likely to be considered:
A)unfair by all economists
B)completely fair by everyone
C)a compensating differential for the cost of becoming educated
D)a signal that the market is indifferent to a worker's level of human capital

Question

Quizplus · Accepted Answer

The wage differential between highly educated workers and less educated workers is considered a compensating differential because it compensates the highly educated workers for the cost and effort invested in becoming educated. It is not considered unfair by all economists, as there are differing perspectives on the role of education in the labor market. It is also not completely fair by everyone, as some may argue that the market does not fully value the contributions of less educated workers. It is not a signal that the market is indifferent to a worker's level of human capital, as the wage differential reflects the importance of education in the labor market.

Differences in Wages Between Highly Educated Workers and Less Educated