Wage differential is a term used in labour economics to analyze the relation between the wage rate and the unpleasantness, risk, or other undesirable attributes of a particular job. A compensating differential, which is also called a compensating wage differential or an equalizing difference, is defined as the additional amount of income that a given worker must be offered in order to motivate them to accept a given undesirable job, relative to other jobs that worker could perform.[1][2] One can also speak of the compensating differential for an especially desirable job, or one that provides special benefits, but in this case the differential would be negative: that is, a given worker would be willing to accept a lower wage for an especially desirable job, relative to other jobs.[3]
The idea of compensating differentials has been used to analyze issues such as the risk of future unemployment,[4] the risk of injury,[5] the risk of unsafe intercourse,[6] the monetary value workers place on their own lives,[7] and in explaining geographical wage differentials.[8][9][10][11]
- ^ Kaufman, Bruce E.; Hotchkiss, Julie L. (2005). "Education, Training, and Earnings Differentials: The Theory of Human Capital". The economics of labor markets (5th ed.). Harcourt College Publishers. ISBN 978-0-324-28879-7.
- ^ Rosen, Sherwin (1986). "The theory of equalizing differences". In Ashenfelter, Orley; Layard, Richard (eds.). The Handbook of Labor Economics. Vol. 1. New York: Elsevier. pp. 641–692. ISBN 978-0-444-87856-4.
- ^ Miller, Richard D. Jr. (2004). "Estimating the compensating differential for employer-provided health insurance". International Journal of Health Care Finance and Economics. 4 (1): 27–41. doi:10.1023/B:IHFE.0000019259.74756.65. PMID 15170963. S2CID 19313510.
- ^ Averett, Susan; Bodenhorn, Howard; Staisiunas, Justas (2003). "Unemployment risk and compensating differential in late-nineteenth century New Jersey manufacturing". National Bureau of Economic Research Working Paper 9977. Cambridge, Massachusetts.
- ^ Biddle, Jeff E.; Zarkin, Gary A. (1988). "Worker preference and market compensation for job risk". Review of Economics and Statistics. 70 (4): 660–667. doi:10.2307/1935830. JSTOR 1935830.
- ^ Rao, Vijayendra; Gupta, Indrani; Lokshin, Michael; Jana, Smarajit (2003). "Sex workers and the cost of safe sex: the compensating differential for condom use among Calcutta prostitutes". Journal of Development Economics. 71 (2): 585–603. CiteSeerX 10.1.1.197.8491. doi:10.1016/S0304-3878(03)00025-7. S2CID 153608532.
- ^ Thaler, Richard; Rosen, Sherwin (1975). "The value of saving a life: evidence from the labor market". In Terleckyj, Nestor E. (ed.). Household production and consumption. New York: National Bureau of Economic Research. ISBN 978-0-87014-515-5.
- ^ Blackaby, D. H.; P. D. Murphy (1995). "Earnings, Unemployment and Britain's North-South Divide: Real or Imaginary?". Oxford Bulletin of Economics and Statistics. 57 (4): 487–512. doi:10.1111/j.1468-0084.1995.tb00036.x.
- ^ Blackaby, D. H.; P. D. Murphy (1991). "Industry Characteristics and Inter-Regional Wage Differences". Scottish Journal of Political Economy. 38 (2): 142–161. doi:10.1111/j.1467-9485.1991.tb00307.x.
- ^ García, Inmaculada; José Alberto Molina (March 2002). "Inter-regional wage differentials in Spain". Applied Economics Letters. 9 (4): 209–215. doi:10.1080/13504850110065849. ISSN 1350-4851. S2CID 154990389.
- ^ Shah, Anup; Walker, Martin (August 1983). "The distribution of regional earnings in the UK". Applied Economics. 15 (4): 507–520. doi:10.1080/00036848300000020. ISSN 0003-6846.
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