LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 5, Problem 15P
To determine
Explain the give statement.
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How does path dependency provide an explanation for differentiation in earnings between men & women?
Suppose Fred's wage-schooling relationship is given by
Years of Schooling
Earnings
9
$28,000
10
$31,150
11
$33,700
12
$35,900
13
$37,400
14
$38,500
Derive the marginal rate of return schedule. When will Fred quit school if his discount rate is 5 percent? What if the discount rate is 10 percent?
Discuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.
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- The Marginal Productivity theory of income determination implies everyone gets paid for the value they produce: Critically assess this claim, exploring the arguments and evidence for and against it, and outline the most prominent alternative theory of income distribution and inequality.arrow_forwardSuppose a worker with an annual discount rate of 8 percent currently resides in Chicago and is deciding whether to remain there or to move to Phoenix. There are three work periods left in the life cycle. If the worker remains in Chicago, he will earn $40,000 in each of the three periods. If the worker moves to Phoenix, he will earn $43,500 in each of the three periods. What is the highest cost of migration that a worker is willing to incur and still make the move?arrow_forwardUsing the concept of opportunity cost, explain why discrimination against any population group is economically inefficient?arrow_forward
- Explain why comparing educational attainment across immigrant generations and across countries of origin is complicated and can lead to misleading estimaes of intergenerational mobility?arrow_forwardThe value of a worker’s marginal product is $40 per hour for high- ability workers and $10 per hour for low-ability workers. The preferences of high-ability workers correspond to the utility function UH(E,W)=W−5E, and the preferences of low-ability workers correspond to the utility function UL(E,W)=W−10E. By law, everyone is required to attend at least five years of school. Two-thirds of the population has low ability, and one-third has high ability. What can you say about the educational attainment of each type of worker in a separating equilibrium, and in a pooling equilibrium? Are workers better off with the most efficient separating equilibrium, or with the most efficient pooling equilibrium? Demonstrate your answer by using appropriate schedules.arrow_forwardWhat factors create the link between wages and productivity that is at the heart of efficiency wage models?arrow_forward
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