LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 6, Problem 6P
To determine
Derive the marginal
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Suppose 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?
Suppose Carl’s wage-schooling locus is given byYears of Schooling Earnings 9 $18,500 10 $20,350 11 $22,000 12 $23,100 13 $23,900 14 $24,000Derive the marginal rate of return schedule. When will Carl quit school if his discount rate is 4 percent? What if the discount rate is 12 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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