| Ability Bias | The fact that earnings differentials across workers do not correctly estimate the returns to schooling if there are unobserved ability differences in the population.
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| Compensating Wage Differential | The extra amount an employer must pay to "reimburse" a worker for an undesirable job characteristic that does not exist in alternative jobs.
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| Hedonic Wage Function | The observed relationship between the wage that workers get paid and job characteristics.
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| Isoprofit Curve | A curve portraying the various wage and job dis-amenity (e.g., risk) combinations that yield a specific level of profit.
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| Reservation Price | The wage premium that will persuade a worker to accept a job with an unpleasant characteristic, such as the risk of injury.
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| Risk Aversion | The preference for working in a job with a steady income stream.
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| Self-Selection | A type of statistical bias encountered when the effects of individual choices are improperly measured. For example, if people with more ability are more likely to obtain high earnings, independently of education, and also more likely to obtain education, failing to account for differences in ability will tend to overstate the effects of education on earnings.
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| Value of Life | The estimated amount that workers are jointly willing to pay to reduce the likelihood that one of them will suffer a fatal injury in any given year. Estimates base on current economic models suggest the value of a life is on the order of $6 million in 1998 dollars.
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