Question

Compensating differentials in practice

It is common that so-called “3D jobs” (Dirty, Dangerous and Demanding) pay lower wages in the real world than non-3D jobs. This seems to contradict what the compensating differential model predicts. How would you defend the model?

Answer 1

3D jobs get to pay when compared to other jobs where compensating differential model tells us that if the risk of job is higher then a person should be paid more 3D jobs are against that rule however it has to be understood that also the skill matter that is in world with every job and for instance consider and unskilled jobs which might be more risky here then to a similar skilled job and in this case to court and example the engineer job is safe when compared to that of the labor going under the mine however hear the skill engineer is more required then the unskilled of the labour and this tells us that not only the risk factor but also many other factors come to play and for similar jobs compensation differential model applies.