LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 6, Problem 5RQ
To determine
The effect of the differences in discount rate on differences in earnings and schooling.
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Students have asked these similar questions
Discuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.
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?
How does a human capital investment in education increase your lifetime earning?
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- How does skill atrophy provide an explanation for differentiation in earnings?arrow_forwardHow does path dependency provide an explanation for differentiation in earnings between men & women?arrow_forwardSuppose Carl’s wage-schooling locus is given by Years of Schooling Earnings 10 $30,000 11 $35,000 12 $40,000 13 $45,000 14 $50,000 15 $55,000 16 $60,000 17 $65,000 Derive the marginal rate of return schedule. When will Carl quit school if his discount rate is 14 percent? What if the discount rate is 9 percent?arrow_forward
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