What is Geographical Differential?

Whether you're a beginner or an expert, you will find this Glossary useful.

Geographical differentials refers to difference in pay for similar jobs that are based on different geographical locations. 

Geographical differentials definition

Geographical differentials refers to difference in pay for similar jobs that are based on different geographical locations. The geographic definitions used are mainly cities, states, broad region or territory, country etc.

Large expensive cities like London often include a percentage of the basic salary as a supplement to cover the increased costs of living in that city.

Three common methods used to implement geographic differentials:

• Different salary structures in different locations

• Individual adjustments to base salaries

• Supplemental geographic differential payments

Factors used to calculate the geographic differentials are local cost of living, inflation, unemployment or employment data etc.



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