Question

7. Is it possible for a specific job condition to generate a positive compensating wage differential (CWD) in one time period and to generate a negative CWD in a different time period? Why or why not? 8. In the cost-benefit analysis of a proposed safety standard, an estimated compensating wage differential can be used in estimating the benefit. Explain why this approach may understate the true benefits of the standard to the society

Answer 1

7. Yes, it is possible to change the compensating wage from positive to negative and vice versa based on the economic conditions of the home and international market. If the inflation arises, the prices rise for all the commodities and it impacts showing on employment. So, the organizations or firms and industries try to reduce their staff so the unemployment happen. In this situation, the compensation wage pays very less to labors and employees. The negative compensating wage continues a certain period of time until the inflation disappears.

If there is no inflation, the economic influence leads to increase the positive compensating wage in the home and international markets. The employment will increase in all the areas of categories in firms. This is all situation based on the economic conditions in the period of time to impact show on positive or negative influence on compensating wage.

8. The economic crisis in the home and international market leads to affect on employment across the globe. In this situation, all the companies or organizations try to reduce the staff as much as possible to gain the cost-cutting benefit. In this scenario, the unemployment increases and no new job opportunities will not available in the home and international markets. This is really a tough period and there is no consideration to remove the worth candidates which are receiving huge salaries. In this time period, the employer’s maximum giving very fewer salaries and wages to employees and labors so this cost-benefit will continue until the disappear of economic recession.