According to compensating differential theory:
(1) Should a job with health insurance pay more than a job without (holding all else constant)?
(2) If population data were analyzed, it would likely show that wages are higher (on average) in the jobs that the theory of compensating differentials would predict to be lower. Why would this discrepancy exist?
(3) Explain how an economist might solve the problem confronted in (b) and accurately estimate the compensating differential Explain in sufficient detail, providing an equation if necessary.