FIGURE 11.6 Standard deviation of compensation and mean compensation.
As an example, firms employing one to four employees paid on the average about $3396, whereas those employing 1000 to 2499 employees on the average paid about $4843. But notice that there is considerable variability in earning among various employment classes as indicated by the estimated standard deviations of earnings. This can be seen also from Figure 11.6, which plots the standard deviation of compensation and average compensation in each employment class. As can be seen clearly, on average, the standard deviation of compensation increases with the average value of compensation.
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