CONTEMPORARY LABOR ECONOMICS (LOOSE)
11th Edition
ISBN: 9781259751950
Author: McConnell
Publisher: MCG
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Question
Chapter 4, Problem 1QS
To determine
Explain the cost and benefit associated with obtaining a collage education from both private and social perspectives.
Expert Solution & Answer
Explanation of Solution
The investment in the college education will increase the efficiency of labor force with an improvement in the technical know-how. The efficient investment in the education sector will make a huge hike in the quality of production due the efficient use of labor and capital inputs. The investment in education is a kind of investment in the human capital. The older people will invest more in the collage education because of their short length of future earnings stream and high
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Question 1—Investment in Human Capital(6,000 character limit on all answers combined)Assume that there are two types of individuals in the population: Type A and Type B withthe corresponding fractions f1 and f2. The levels of ability for the two types are: αA andαB, with αA > αB. Suppose also that Type A lives for TA years, while Type B lives for TByears.Briefly answer/evaluate FOUR out of the following six statements:A. If the financial resources available for a Type B individual are greater than those available for a Type A individual, it is possible that the former will invest more in his/herhuman capital.B. Suppose that human capital is not productive, which of the two types will get moreinvestment in schooling?C. Suppose that the government provides all wages and sets all wages to be the same.How would that affect the incentives of the two groups to invest in human capital?1D. If TB > TA then Type B will get more education, otherwise Type A will definitely getmore…
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