The term compensating wage differential refers to group of...

The term compensating wage differential refers to: Group of answer choices the bargaining capacity of a monoposonist in the labor market. the wage differences that arise from differences in the risk involved in different jobs. the wage differences that arise from difference in productivity of the workers in a firm. the negotiating power of the trade union.

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00:01 So here we have got four proposals for what a compensating differential is.

00:05 If you're just interested in the answer, the answer is d.

00:08 It's when wages adjust to job conditions.

00:11 But let me try to rule the others out and explain d a little bit more thoroughly.

00:14 First of all, the wage response to automation is just not a thing.

00:20 I've never heard of this rigorously divined.

00:24 In general, remember that wages are equal to the marginal product of labor.

00:29 If automation is not changing the marginal product of labor, it's not going to change the wage.

00:35 If it is changing the marginal product of labor, then we don't need a special term for it because we already know what that's how the wage is set, right? so you would need to have something added to this equation on one side or the other.

00:49 And while automation might indeed change the marginal product, since that's how wages are already set, we don't need a term for it.

00:56 An hour's response for low -wage workers.

00:59 I have no idea where this is coming from, right? i guess you could maybe say that, yes, low -wage workers are not paid that much.

01:12 They maybe should have the opportunity to work more if they want to pick up more hours and earn.

01:19 But this is not how labor markets work...

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