One criticism of the theory of compensating differentials, Business Economics

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One criticism of the theory of compensating differentials

1. One criticism of the theory of compensating differentials is that workers who earn high (cash) salaries generally receive better benefits and working conditions than workers who earn low salaries.

A. Does this fact necessarily disprove the theory of compensating differentials? Why or why not?

B. Does the positive correlation between salaries and benefits/working conditions necessarily mean that inequality in total compensation is greater than inequal

ity in cash salaries?

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