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Economics 101: Compensating Differential | SterlingTerrell.net

Economics 101: Compensating Differential


What is a compensating differential?

A Compensating Differential is the pay that a worker demands to accept an undesirable job.

For instance, I love working as a writer, and I do not like construction.

What pay would I demand to take a 40 hour a week job working in construction?

That is a compensating differential.

And the answer is, a lot.