Research done in the United States, based on U.S. Census data, finds that-during

Question

Research done in the United States, based on U.S. Census data, finds that-during an adult's working life-high school graduates earn an average of $1.2 million, associate's degree holders earn about $1.6 million, and bachelor's degree holders earn about $2.1 million. Major league hockey goalies earn more than minor league hockey goalies. Two automotive technicians have the same amount of schooling and work experience, but earn different wages. The first works the day shift for an auto manufacturer factory for an annual wage of $51,000 per year, and the second works the night shift for the same company for an annual wage of $61,000 per year.

Explanation / Answer

(1) Difference in human capital

Earning is higher (lower) for higher (lower) educated workers with higher (lower) human capital.

(2) Difference in natural ability

Goalies in major leagues have higher natural ability than those in minor leagues, so earn higher.

(3) Compensating differential

The night shift worker gets a compensating wage of $10,000 to compensate for working in an unwanted (night) shift.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.