Using Model 2, suppose

(a) Job A has dangerous working conditions, which workers would be willing to pay a minimum of $2 an hour to remove and

(b) Job B has a better fringe benefit program, which workers would pay up to $1 an hour to get. How will the hour money wages compare between these two jobs? Which job will workers prefer to take?

Model 2:

ASSUMPTIONS 1. All workers are equally skilled.
2. Jobs differ in their working conditions. Some are pleasant, some dangerous, and so forth.

3.  Competition exists among employers (there are no monopsonies) and workers (there are no unions).
4. Workers are well informed about what jobs pay.

5. Workers place the same value on amenities and disagreeable working conditions.
Assumption 2 means workers now will compare not only wages but working conditions as well. Assumption 5 assures that all workers place the same value on any particular job’s working conditions and so are willing to accept the same money wage for that particular job.