Why wage differentials exist?

In a free market, wages are determined by supply and demand.

Generally, positions that require skills that most people do not have will have higher wages than a job that anyone can do. The number of people who are willing to do the job (at the current wage rate) also factors into the wage of a job. If nobody will do the job for a certain wage, then they have to increase the wage rate until they can entice someone (who is qualified) to take the job at a higher rate.

Another factor is the demand for the job. If the job performs duties that the world cannot live without, then generally the wage will be higher. Of course, there are many other factors associated with supply and demand, but these are the most basic.

Keep in mind that these factors do not apply as much to government-type jobs such as police officers, firemen, and government employees. In an economic sense, part of the "wage" paid to those employees is the job security associated with the jobs and the pride associated with performing those jobs.