What is the difference between wage differentials caused by ...

[09madisonrousseau09]

What is the difference between wage differentials caused by differences in human capital and compensating wage differentials?
 
  What will be an ideal response?

Question 2

In the figure above, when the market is unregulated and in equilibrium, the deadweight loss is ________ thousand per month.
 
  A) 250
  B) 125
  C) 150
  D) 50
  E) zero

[xiazhe]

Answer to Question 1

Human capital refers to an individual's stock of skills to produce economic value. With higher education and experience, the human capital of an individual increases. Hence, people with a higher level of human capital tend to get higher wages than people with a lower level of human capital. On the other hand, compensating wage differentials arise from the nature of the job rather than the human capital involved. A compensating wage differential is a wage premium paid in order to attract workers to otherwise undesirable occupations.

Answer to Question 2

A

[09madisonrousseau09]

Correct answers!

[xiazhe]

Great! Please up vote