Geographic differential is when there are the various differences in salary based on their geographical location. This is a split of wage differences which seeks to analyse what the link is between the negative aspects of the jobs.

An example of a geographic differential is when an employee living in the city where living costs are quite high might have higher rate in salary based on the expenses involved in that particular city, compared to an employee living in a smaller town with lower labour costs. A geographic differential is considered to make a decision on a salary range for a new job position within the organisation.