The financial encyclopedia uses cookies to improve your user experience. Find out more here!




Compensating wage differential


A differential in wages intended to compensate workers for special non-pecuniary aspects of a job. Examples would be extra pay for work with hazardous substances or involving unsocial hours. The compensating wage differential for taking on a job which involves the possibility of accidental death is used to infer the value of life.


Reference: Oxford Press Dictonary of Economics, 5th edt.