Question

Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $53,000 per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $74,000 per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $94,000 per year.

According to economists, this difference in earnings is mostly due to_______.

Answer 1

Answer: Compensating Differential.

Step-by-step explanation:

There are jobs that we wouldn't do unless offered a higher amount of money because these jobs might be undesirable for a range of reasons such as being more dangerous than other jobs or being socially looked down upon.

This extra amount of money that we are offered to do such jobs is called the Compensating differential. It is paid to entice people to do jobs they would otherwise not want to do. The civil engineer making such huge amounts of money is being paid that amount because of the danger involved in inspecting cables on suspension bridges.

The rest are also being paid according to the risk they are incurring.