Differences

in Human

Compensating

Differences

Labor

Capital

Differential

in Ability

Unions

A law firm hires Maria, a recent graduate from law school, and pays her an annual wage of $$40,000.$ It also hires Hilary, a second$-$year law student, and pays her an annual wage of $$30,000.$ Maria and Hilary were born in the same country, attended the same university, and studied in the same graduate program.

Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $$51,000$ per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $$80,000$ per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $$90,000$per year,

Major league basebail pitchers earn more than minor league baseball pitchers.