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- Question 1 You are the human resource manager at a large organization. Each worker in your organization produces output valued at $15 per hour (ie. VMP = $15). You want to deter shirking and turnover by paying a deferred wage profile where the hourly wage is W = 4/5T, where T is tenure, or length of time that the person remains with the firm. Draw the diagram of the deferred wage profile. Solve for the breakeven point, or length of time the person would have to stay with the firm so that her wage would just equal their productivity. Determine the length of time she would have to stay with the firm for her expected wage over that period to just equal her productivity (assume no discounting so that a dollar today is the same as a dollar in the future). If the vast majority of the people start working with the firm at age 35, what mandatory retirement age would you pick to provide a termination data to that contractual agreement?Derive the utility function of a worker who is aiming to maximize his utility in the market for risky jobs. Explain and illustrate graphically how this worker will be making his choice among different alternatives of risk/wage combinations.Suppose Carl’s wage-schooling locus is given by Years of Schooling Earnings 10 $30,000 11 $35,000 12 $40,000 13 $45,000 14 $50,000 15 $55,000 16 $60,000 17 $65,000 Derive the marginal rate of return schedule. When will Carl quit school if his discount rate is 14 percent? What if the discount rate is 9 percent?
- Identify the largest 5 backs in the United stated.16) If labour market discrimination crowds women into a limited number ofoccupations so that the number of occupations available to men increases, then(a) the wages of men will be lower, but the marginal productivity of men will be higherthan it otherwise would be.(b) both the wages and the marginal productivity of men will be higher than theyotherwise would be.(c) both the wages and the marginal productivity of men will be lower than theyotherwise would be.(d) wages of men will be higher, but the marginal productivity of men will be lowerthan it otherwise would be.Jack Reminds Samuel that, as an early career professional, he’s only making a fraction of the average American household income used in the chart ($78,635). So, he recommends Jack calculate what his monthly Pension & Personal Insurance cost would be if it was in proportion to the salary he’s making. How much would this be?
- a. Draw the wage-schooling locus for someone for whom the returns to schooling decrease through college but increase after college. (Assume college is completed after 16 years of schooling and that one can receive at most 6 years of postcollege schooling.) b. On a new graph, plot the marginal rate of return to schooling implied by the wage-schooling locus described in part a. c. What can be said about a college graduate who faces the wage-schooling locus described in part a?Jill is planning the timing of her on-the-job training investments over the life cycle. What happens to Jill’s OJT investments at every age if a. The market-determined rental rate to an efficiency unit falls? b. Jill’s discount rate increases? c. The government passes legislation delaying the retirement age until age 70? d. Technological progress is such that much of the OJT acquired at any given age becomes obsolete within the next 10 years?Q) Suppose that utility for a worker is u(w)=w^.5. If the wage (w) offered is $64, there is a 50% chance of being fired, and switching costs are $28. What is the expected utility for the worker? Explain it early
- Asap Jennifer has earnings of $2,400 and faces a constant marginal tax rate of t= 0.3. If she is caught not reporting some of her income (where U is the amount of income she doesn't declare), then her marginal penalty is U/1000. There is a 20% chance she will be caught. How much income will she optimally declare? Show on a diagram.Bruce and Eve currently live in Tulsa. Bruce currently earns $30,000 per year while Eve earns $40,000 per year. Bruce has family in Tulsa, so he has a higher moving cost ($25,000) than Eve ($10,000). Let’s assume that each person lives for 4 periods and have the same discount rate (0.1). (a) Calculate Bruce and Eve’s present value of earnings if they both stay in Tulsa. (b) Recently, Bruce received a job offer in Denver earning $40,000 while Eve got a job offer for $50,000. (1) Would Bruce move if he were single? Explain your reasoning. (2) Would Eve move if she were single? Explain your reasoning. (3) Will they move as a married couple? Explain your reasoning. (c) Suppose that Bruce and Eve only live for two periods now. Re-do part b. Explain why youranswers changed.Explaining the college premium in the 1970s: As shown in Figure 7.8, the col-lege wage premium declined in the 1970s. Using a supply-and-demand graph, explain why this decline might have occurred.
