LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 12, Problem 7P
To determine
Explain the effect of the proposed legislation on the wage and
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Suppose that a labor economist performs a statistical analysis on economywide worker wages using standard, measurable explanatory factors, such as
job characteristics, years of schooling, and so forth.
How much of the variation in worker wages can be accounted for by such measurable explanatory factors?
Somewhat more than 60%
Nearly 100%
Somewhat less than 50%
About 0%
Which of the following factors are typically omitted from the quantitative analysis of wages but can help explain otherwise unaccounted-for
disparities? Check all that apply.
Chance
Attractiveness
Natural ability
Effort
Race
O O
O O
See the labor market graph directly below. If there is a sticky wage of $20, what is the unemployment rate in
this labor market?
20
on
16
16
12
A Labor Market
160
15.00%
8.57%
9.38%
>0%
10.00%
16.00%
Although the graph does
not present complete
labels, standard labor
market labels apply.
Note: graph is not to
scale.
175
(millions)
How has microsoft contributed to the unemployment rate (has it laid off people within the last year(s))
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- Suppose the government proposes to increase the level of UI benefits for unemployed workers. A particular industry is now paying efficiency wages to its workers in order to discourage them from shirking. What is the effect of the proposed legislation on the wage and on the unemployment rate for workers in that industry?arrow_forwardSuppose that all other factors affecting the labor market remain constant. Graphically illustrate and explain what is the effect of an increase in unemployment benefits on the equilibrium levels of real wage and unemployment. (Hint: In your graph, put the real wage on the vertical axis, and the level of unemployment on the horizontal axis. Use wage-setting relation and price-setting relation to analyze the question.) Upload your results by taking a photo / scan of your answer.arrow_forwardTypically, even at similar stages of the economic cycle, the unemployment rate in several West European countries is higher than in the United States. To what extent can the above observation possibly be linked or not with the fact that in Europe: (1) the unionization rate is higher (2) laws often make it more difficult to lay off people, (3) collective bargaining is more or less centralized, (4) unemployment insurance programs are relatively more generous.arrow_forward
- The rate of job separations in the economy is 0.013 (1.3 percent) and rate of job finding is 0.25 (25 percent). a) If the economy has 500 workers in the labor force, calculate the unemployment rate and the number of unemployed in the steady state. b) If the rate of job separations is 1 percent, what happens to the unemployment rate and the number of unemployed in the steady state? c) If labor force suddenly increases by 20 workers who are seeking work (and the rate of job separations remains at 1 percent), what is the immediate change in the unemployment rate? What is the new steady-state unemployment rate? Draw a graph on how unemployment rate evolves in time.arrow_forwardWhile economists measure unemployment at the macroeconomic level, microeconomic forces are often responsible for this macro aggregate. In other words, the tie between microeconomics and macroeconomics is inevitable when discussing the level of unemployment in an economy. Suppose the following graph represents the market for unskilled labor in a fictional economy. These workers typically represent the young, inexperienced, or uneducated part of the labor force and are therefore most effected by changes in the unemployment rate. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this grapharrow_forwardIn which of the following cases will we observe unemployment? the quantity of labor demanded is greater than the quantity of labor supplied at the going wage rate. the wage is below the level that balances supply and demand for labor. there is a shortage of workers. the quantity of labor demanded is less than the quantity of labor supplied at the going wage rate.arrow_forward
- Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect to be associated with the higher unemployment rate (7%).arrow_forwardAccording to the most recent survey conducted by Statistics Bureau of Metropolis, currently there are 14 million people between the age of 15 and 64 living in the city. If the labour force participation rate in Metropolis is 65 percent and 8.5 million people currently have jobs, what is the rate of unemployment? Options: A) 3.7% B) 7.8% C) 6.6% D) 11.4% E) 12.9% Show all working out and full explanations.arrow_forward3arrow_forward
- do fast .arrow_forwardSee the labor market graph below. If there is a sticky wage of $12, what is the unemployment rate? 20 16 12 A Labor Market 160 160 0% 8.57% 9.38% 10% 15% 16% 175 Although the graph does not present complete labels, standard labor market labels apply. Note: graph is not to scale. (millions)arrow_forwardSuppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government Establishing government-run employment agencies to connect unemployed workers to job vacancies Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeksarrow_forward
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