LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 5, Problem 13P
To determine
Determine labor
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A firm is considering adopting a plan in which it would pay employees less than their MRPL early in their careers and more than their MRPL late in their careers. For a typical worker at the firm MRPL = 10 + 0.1T, where T = the number of years which the worker has been employed at the firm and MRPL is measured in dollars per hour. The worker’s wage per hour is W = 8 + 0.2T. Assume that this wage is high enough to attract workers from alternative jobs, that the discount rate for the firm is zero, and that the expected tenure of a typical worker is 35 years. If workers retire after 35 years, will this plan be profitable for the firm? Explain. For how many years will the firm “underpay” it workers?
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Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Jobs where the product or service is "non-essential" yet is in high demand with a limited pool of exceptionally talented workers are likely to have higher wages than jobs where the product or service is "essential."
True
False
Show that the competitive labor market compensates workers for the probability that they will be laid off.
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- In order to make a hiring decision, a manger must: Compare wage rate with MPL. If Wage rate is equal to MPL then hire Compare wage rate with MPL. If wage rate is less than MPL then hire. Compare wage rate with MPL. If wage rate is greater than MPL then hire. Compare wage rate with MRP. If wage rate is equal to MRP then hire Compare wage rate with MRP. If wage rate is lower than MRP then hire.arrow_forwardThe use of group averages to judge individual productivity levels is called Statistical Discrimination. Therefore; this type of discrimination differs from ordinary discrimination because it is based on incomplete information rather than on the utility-maximizing choices of people with accurate information? True Falsearrow_forwardTo which of the following job characteristics could the hedonic wage function be applied? a. the degree to which a job involves monotonous work b. the degree to which the area surrounding the job location is safe c. the degree to which a job involves strenuous work d. the probability of being injured on the job e. All of these can be represented with a hedonic wage function.arrow_forward
- Please do not copy other answers. They are wrong. Which of the following is not a potential solution to adverse selection in the labor market?Group of answer choices A. The employer can design the job such that job applicants self select when applying. B. The job applicant can send a credible signal about their desirable qualities. C. The employer can interview as many people as possible. D. The employer can gather information on the job applicant. Only typed Answerarrow_forwardSuppose a group of high school friends work at the same fast food restaurant. They all dislike the manager because she doesn’t allow them to swap shifts with one another whenever someone has a big exam to study for or a date. One of the friends suggests that they all agree to walk out if the manager doesn’t change her policy. Which of the following is the most likely outcome of such a walkout? multiple choice Wages will remain constant and the workers will be replaced. The workers will all be replaced, but wages will increase to avoid similar problems in the future. Wages will increase due to the unified pressure of all the workers. Wagesarrow_forwardA worker receives CAD 3,000 of lump-sum transfers from the government annually andhas 4,160 available hours per year. She is currently working 2,200 hours per year at the wage rateof CAD 20.00 per hour. After being promoted, her wage rate increases to CAD 25.00 per hour,and she decides to work 2,700 hours. She is indifferent between her original work decision andworking 2,850 hours at CAD 25.00 per hour.1. What is the compensated wage elasticity of labor supply implied by her response to thewage increase? Is the compensated labor supply elastic or inelastic?2. What is the uncompensated wage elasticity of labor supply implied by her response to thewage increase? Is the uncompensated labour supply elastic or inelastic?3. Why are these elasticities different?arrow_forward
- Suppose a single parent can work up to 16 hours per day at a wage rate of $30 per hour and has no non-labour income. An income maintenance program has been developed to assure a minimum level of income for low-income families. A simplified version of this type of a program is one that would give this single parent a $120 no-work grant accompanied by a benefit reduction of a dollar for every dollar earned until no benefit is left to pay. For example, to someone who does not work the program pays $120, while for someone who works 1 hour and earns $30 the benefit is reduced by $30 to $90. Draw the daily budget constraints with and without program participation for the single individual described above on the plane that has leisure L on the horizontal axis, and money income Y (inclusive of benefits if on a program) on the vertical axis. Carefully mark all the important points of the constraints and indicate the slopes. Question: At what level of labour market earningsdoes the subsidy end?…arrow_forwardAs an employer, suppose you find it costly to monitor employee effort 100 percent of the time. What compensation options, in terms of the basis of pay, are available to ensure that you get appropriate levels of employee effort? What factors would you consider in choosing among these options?arrow_forwardSome workers are “skilled”. Each of them on average will install 4 packages per day. The rest of the workers are “rookies”, who on average install 1 package per day. Each package creates a value of $100 for the shop owner. The supply curve of skilled workers is QS = W – 100 and the supply curve of the rookie workers is QR = 4(W – 100), where W is the daily wage. The market for workers is perfectly competitive. If employers cannot observe each worker’s ability, how many packages per day will the workforce install in equilibrium? 480 300 240 None of the abovearrow_forward
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