LABOR ECONOMICS (LL+ACCESS)
8th Edition
ISBN: 9781264909339
Author: BORJAS
Publisher: MCG
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Question
Chapter 6, Problem 2RQ
To determine
The determination of wage-schooling locus and the reason behind its positive slope.
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Discuss how the wage-schooling locus is determined in the labor market, and why it is upward sloping and concave.
What factors create the link between wages and productivity that is at the heart of efficiency wage models?
What is factor mobility?
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- How is the market-compensating wage differential between safe jobs and risky jobs determined? Which type of job will offer a higher wage?arrow_forwardWhy does a worker allocate his or her time over the life cycle so as to work more hours in those periods when the wage is highest? Why does the worker not experience an income effect during those periods?arrow_forwardHow does a higher interest rate affect the elements of schooling choice? ○ The wage-schooling curve shifts up. Wealth increases, increasing the iso-wealth curves. O Every iso-wealth curve gets steeper. O The wage-schooling curve gets steeper.arrow_forward
- Why do efficiency wages generate involuntary unemployment? What factors prevent the market from clearing in efficiency wage models?arrow_forwardSuppose that, on average, men earn $17 an hour and have an average of 15 years of schooling. Women earn $15 an hour and have an average of 14 years of schooling. If the estimated return to schooling for men is 0.30 (implying that each additional year of schooling translates into an additional 30 cents per hour) and the returns for schooling for women is 0.2, then the gender gap in schooling explains: 10% of the wage gap between men and women. 20% of the wage gap between men and women. 30% of the wage gap between men and women. 15% of the wage gap between men and women.arrow_forwardSuppose the United States enacts legislation granting all workers, including newly arrived immigrants, a minimum income floor of y dollars. (Assume there is positive selection of migrants from the home country to the United States.)a. Generalize the Roy model to show how this type of welfare program influences the incentive to migrate to the United States. Ignore any issues regarding how the welfare program is funded.b. Does this welfare program change the selection of the immigrant flow? In particular, are immigrants more likely to be negatively selected than in the absence of a welfare program?c. Which types of workers, the highly skilled or the less skilled, are most likely to be attracted by the welfare program?arrow_forward
- About 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_forwardDiscuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.arrow_forwardDescribe the income-leisure trade-off. Why might the labor supply curve bend backwards at high wages?arrow_forward
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