1. About what proportion of the variation of wages across workers
is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?
2. Lucy and Lincoln are salespeople working for the same company with equal skills, ability, and experience. Both are paid a small base salary but the majority of their compensation is in the form of a commission, which is a percentage of the sales they make. Lucy earns more each year than Lincoln. What can you conclude about Lucy and Lincoln?
3. Consider two groups of workers of equal skill level and experience: those who collect garbage and those who stuff envelopes with campaign fliers. Which group is likely to be paid more and why?
Answers: 2
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