Question

Nancy and Sheila are both loan officers who graduated from the same university with bachelors’ degrees in economics, and achieved similar performance reviews. Nancy started working one year before Sheila. If Nancy earns a higher annual salary than Sheila because she has more experience, the employer is
a. paying a compensating differential.
b. paying efficiency wages.
c. practicing discrimination.
d. rewarding increases in human capital.

Answer 1

Answer:

The correct answer is letter "D": rewarding increases in human capital.

Explanation:

Rewarding increases in human capital refers to providing prizes and incentives to employees after obtaining certain knowledge within their functions or when they have achieved certain goals in the company. It is one of the most common promotion methods used by firms after which employees earn raises or a different charge.  

Entities motivating their human capital increase the chances of those individuals being more committed to the firm boosting their productivity.