Contemporary Labor Economics
11th Edition
ISBN: 9781259290602
Author: Campbell R. McConnell, Stanley L. Brue, David Macpherson
Publisher: McGraw-Hill Education
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Chapter 2, Problem 13QS
To determine
The payments for disabled and the work–leisure model.
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in the McCall partial equilibrium model, if unemployed individual can only live for 10 periods. In each period, she will receive $400 if unemployed. The offered wage is uniformly distributed in the range of [500,1000]
1.what will the reservation wage be in the period 9 if the discount rate is 0.9?
2.what will the reservation wage be in the period 8 if the discount rate is 0.9?
Workers in countries such as Sweden and Germany work fewer hours per week, on average, than do workers in the United States. Does this mean that Swedes and Germans are lazier than Americans? Explain how laziness could be interpreted in the context of the work-leisure choice model developed in this chapter. What other information might you want to gather to determine whether Swedes or Germans were indeed less work oriented that Americans?
what happens in the work-leisure model, when the wage rate is decreasing and income effect is stronger than substitution effect?
Chapter 2 Solutions
Contemporary Labor Economics
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