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1. Why wages differ For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences in Human Capital Compensating Differential Differences in Natural Ability Labor Unions Scenario Major league hockey goalies earn more than minor league hockey goalies. A law firm hires Frances, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Caroline, a second-year law student, and pays her an annual wage of $30,000. Frances and Caroline were born in the same country, attended the same university, and studied in the same graduate program. Two security guards have the same amount of schooling and work experience, but earn different wages. One of them works for a prison and earns an annual wage of $51,000 per year. Another works for a museum and earns an annual wage of $32,000 per year.

1. Why wages differ For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences in Human Capital Compensating Differential Differences in Natural Ability Labor Unions Scenario Major league hockey goalies earn more than minor league hockey goalies. A law firm hires Frances, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Caroline, a second-year law student, and pays her an annual wage of $30,000. Frances and Caroline were born in the same country, attended the same university, and studied in the same graduate program. Two security guards have the same amount of schooling and work experience, but earn different wages. One of them works for a prison and earns an annual wage of $51,000 per year. Another works for a museum and earns an annual wage of $32,000 per year.

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.8P
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1. Why wages differ For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences in Human Capital Compensating Differential Differences in Natural Ability Labor Unions Scenario Major league hockey goalies earn more than minor league hockey goalies. A law firm hires Frances, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Caroline, a second-year law student, and pays her an annual wage of $30,000. Frances and Caroline were born in the same country, attended the same university, and studied in the same graduate program. Two security guards have the same amount of schooling and work experience, but earn different wages. One of them works for a prison and earns an annual wage of $51,000 per year. Another works for a museum and earns an annual wage of $32,000 per year.
Transcribed Image Text:1. Why wages differ For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences in Human Capital Compensating Differential Differences in Natural Ability Labor Unions Scenario Major league hockey goalies earn more than minor league hockey goalies. A law firm hires Frances, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Caroline, a second-year law student, and pays her an annual wage of $30,000. Frances and Caroline were born in the same country, attended the same university, and studied in the same graduate program. Two security guards have the same amount of schooling and work experience, but earn different wages. One of them works for a prison and earns an annual wage of $51,000 per year. Another works for a museum and earns an annual wage of $32,000 per year.
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