PRINC OF ECONOMICS PKG >CUSTOM<
7th Edition
ISBN: 9781305018549
Author: Mankiw
Publisher: CENGAGE C
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Chapter 19.1, Problem 1QQ
To determine
Compensating differential.
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(i) Discuss the Hedonic Theory of Compensating Wage Differentials.
(ii) To what extent is the main theme of the theory applicable to the level of wages paid in the Labour market?
Explain the fact that from 1900 to 2009 the female labor force participation rate increased from 20.6% to 59.2 %. Use reservatio wage and technologicaladvancement in your explanations?
Alternative explanations of wage disparities
Suppose that a labour economist finds that one of her research subjects has earned significantly higher wages throughout his lifetime than would be predicted by standard measured variables. The economist also noted that each of the subject's positions was found through connections at his family's exclusive country club.
Which one of the following most likely explains this person's unusually high earnings?
a) Effort
b) Compensating differentials
c) Chance
d) Efficiency wages
Suppose that Frances receives higher pay at her workplace than her colleagues do, even though they perform essentially the same type of work. If Frances's productivity is about 25% higher than that of each of her colleagues, which of the following wage concepts can explain this wage disparity? Check all that apply.
a) Efficiency wages
b)The superstar phenomenon
c) Discrimination
d) Human capital
e)…
Chapter 19 Solutions
PRINC OF ECONOMICS PKG >CUSTOM<
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- Does a gap between the average earnings of men and women, or between whites and blacks, prove that employers are discriminating in the labor market? Explain briefly.arrow_forwardSuppose that education is the only factor that affects productivity and that an additional year of education raises wages by 2%. Suppose in 2011 gender wage gap was 13%, and the average man had 15 years of education while the average women had 14 years of schooling. a) Using the wage gap decomposition technique, calculate how much of the 13% wage differential is due to discrimination? b) Now suppose in 2021 the gender wage gap is 10%, but the average woman’s education level is increased to 17 year and the average man’s education increases to16 years. (Assume that the return to education stays same at 2%), Was there a decrease or an increase in wage discrimination in the decade? Why?arrow_forwardPls help with below homework. Explain the gender stratification results and its relation with education , occupation , earnings ,and criminal activity. Give specific real life examples to clear the concept.arrow_forward
- What is meant by investment in human capital? Use this concept to explain (a) wage differentials and (b) the long-run rise of real wage rates in the United States.arrow_forwardAbout what proportion of the variation of wages across workers is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?arrow_forward1. What happens to the reservation wage if non-labour income increases and why?2. What economic factor determined whether a person participates in the labour force?arrow_forward
- What is a compensating wage differential? Discuss whether or not we observe such differentials in life. Further discuss, whether a compensating wage differential can actually “compensate” associated risks.arrow_forwardQuestion 5 – Wage Structure Suppose the 50 % of a country’s population with the lowest income receive 30 % of the nation’s income, that the 50% with the highest income receive 70% of the nation’s income. a) What is the Gini coefficient for the country? b) What is the limitation associated with Gini coefficient measure?arrow_forwardAssume that you are 18 years old and deciding whether to go to university or start working. If you work, you will earn a constant wage WHS throughout your career. If you study, you pay tuition for four years and then earn a constant wage WUNI.a. Show the condition under which you will choose to study. b. Explain how changes in tuition, interest rate, and wage differential (WUNI – WHS) wouldaffect your decisionarrow_forward
- 20- What does employment in the narrow sense include? a) Entrepreneur B) Fee NS) Natural resource D) Capital TO) Workarrow_forwardExplain the fact that from 1900 to 2009 the female labor force participation rate increased from 20.6% to 59.2 %. Use reservation wage and technological advancement in your explanationsarrow_forwardHow is the value of marginal product of labor (VMPL) defined? a.Price of output multiplied by the output of the last worker hired b.Price of output multiplied by the price of the last worker hired c.Price of the last worker hired d.Price of outputarrow_forward
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