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Do more capable workers get better working conditions?

Posted Oct 29 2012 12:00am

More capable workers typically do have the best working conditions.  The theory of compensating differentials, however, says that workers should be compensated in the form of higher wages for job amenities.  So why is this the case empirically?

Today, I review the Hanbook of Labor Economics chapter by Sherwin Rosen titled “ The Theory of Equalizing Differences ” to find the answer.

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