John and Mark hold equivalent secretarial jobs, but John, who makes 20 percent more than Mark, is employed by a manufacturing firm while Mark is employed by a department store. Based on this information, which of the following best explains this pay differential?

A) interindustry wage differentials

B) differences in human capital intensity

C) merit exception of the Equal Pay Act of 1963

D) John's stronger negotiation skills

The answer is A) inter industry wage differentials

Explanation:

Although John and Mark hold equivalent secretarial jobs, their salaries are different due to that they work in different industries. The manufacturing firm might be benefiting increased effort and, lower turnover costs, a higher quality workforce, and improved worker morale and better group work norms.

Firms may find it profitable to pay greater than competitive wages to unionized workers to prevent strikes and maintain industrial peace.