Scenario Differences in Human Capital Compensating Differential Differences in Natural Ability Labor Unions Two automotive technicians have the same

Scenario

Differences in Human Capital

Compensating Differential

Differences in Natural Ability

Labor Unions

Two automotive technicians have the same amount of schooling and work experience, but earn different wages. The first works the day shift for an auto manufacturer factory for an annual wage of $55,000 per year, and the second works the night shift for the same company for an annual wage of $64,000 per year.

Major league hockey goalies earn more than minor league hockey goalies.

Research done in the United States, based on U.S. Census data, finds that—during an adult's working life—high school graduates earn an average of $1.2 million, associate's degree holders earn about $1.6 million, and bachelor's degree holders earn about $2.1 million.