Ability Bias Can Arise When Estimating Compensating Wage Differentials Associated

question 18

Multiple Choice

Ability bias can arise when estimating compensating wage differentials associated with various job characteristics. What is ability bias in this context?

• A) Low-skilled workers are likely to have low wages but good job amenities.
• B) High-skilled workers are likely to have high wages but poor job amenities.
• C) High-skilled workers are likely to have lower wages than unskilled workers but to have better job amenities.
• D) High-skilled workers are likely to have higher wages than unskilled workers but to have worse job amenities.
• E) High-skilled workers are likely to have higher wages than unskilled workers, but they are also likely to trade some of their higher wages for better job amenities.

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