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Suppose that the compensating differential for a job where wages are highly variable is $10,000 (that is, the worker demands an expected income that is
Suppose that the compensating differential for a job where wages are highly variable is $10,000 (that is, the worker demands an expected income that is $10,000 higher than if the job paid a fixed salary). Now suppose that the worker wins a lottery that quadruples her wealth. Using the heuristic formula we developed in class, and assuming that the worker remains employed in the job with risky wages, what will happen to her compensating differential
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