Question: Compensating differentials. (Ehrenberg & Smith, modified) Some employers offer jobs for which overtime is mandatory. Others offer jobs for which overtime hours are usually available to workers if they wish to work them. Still other employers offer jobs for which overtime hours are not commonly worked. (By law, overtime pay for hourly workers is 50% greater than regular pay.) Suppose that a careful study of wages finds that, all else equal, jobs for which overtime hours are commonly available pay lower wages than jobs for which overtime is not usually worked. (The term "wage" refers to the normal wage, not the overtime wage.) Furthermore, the study finds that jobs for which overtime is not usually worked pay less than jobs in which overtime is mandatory.

1. What do the results of this study tell us about worker attitudes regarding overtime? Why?
2. What kinds of workers would be sorted into each kind of job? Why?

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