[This is part of the series: The Complete Guide To Economics 101.]
What is a compensating differential?
A Compensating Differential is the pay that a worker demands to accept an undesirable job.
For instance, I love working as a writer, and I do not like construction.
What pay would I demand to take a 40 hour a week job working in construction?
That is a compensating differential.
And the answer is, a lot.