Labor Economics
8th Edition
ISBN: 9781260484434
Author: George Borjas
Publisher: Mcgraw-hill Higher Education (us)
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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 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?
Imagine that the wage-schooling locus is given by w(s)=s^(1/3). What will be the optimal level of education for an individual to take if next period’s earnings in any given time are worth 95% of current earnings for that individual?
Answer is s=20/57
I need step by step calculations
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- 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?arrow_forwardHow does path dependency provide an explanation for differentiation in earnings between men & women?arrow_forwardHow does skill atrophy provide an explanation for differentiation in earnings?arrow_forward
- 3 Imagine that the wage-schooling locus is given by w(s)=s^(1/3). What will be the optimal level of education for an individual to take if next period’s earnings in any given time are worth 95% of current earnings for that individual? ---- HINT: the answer is s=20/57. I need step by step solutionarrow_forwardJill is planning the timing of her on-the-job training investments over the life cycle. What happens to Jill’s OJT investments at every age if a. The market-determined rental rate to an efficiency unit falls? b. Jill’s discount rate increases? c. The government passes legislation delaying the retirement age until age 70? d. Technological progress is such that much of the OJT acquired at any given age becomes obsolete within the next 10 years?arrow_forwarda. Draw the wage-schooling locus for someone for whom the returns to schooling decrease through college but increase after college. (Assume college is completed after 16 years of schooling and that one can receive at most 6 years of postcollege schooling.) b. On a new graph, plot the marginal rate of return to schooling implied by the wage-schooling locus described in part a. c. What can be said about a college graduate who faces the wage-schooling locus described in part a?arrow_forward
- why in her calculation of the cost of going to college, an economist would include the amount of forgone earnings over the years spent at college?arrow_forwardDerive the Stopping Rule for Investments in Education.arrow_forwardDiscuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.arrow_forward
- How would you recommend a high school student develop soft skills as an investment in their human capital? Explain in a paragrapharrow_forwardShow that the competitive labor market compensates workers for the probability that they will be laid off.arrow_forwardDiscuss how upward-sloping age-earnings profiles can elicit more effort from workers.arrow_forward
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