EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 7, Problem cFCT
To determine
The reason why French government’s subsidy policy failed to decrease structural
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If older workers have a tax elasticity of labor supply equal to 0.55, by how much will their work activity decline when they reach the
Social Security earnings test limit (.e.. wage ceiling)? Recall that the Social Security earnings test limit says that Social Security benefits
will be reduced by 50 cents for every additional $1 earned after the wage ceiling.
Instructions: Enter your response as a positive percentage rounded to one decimal place. Do not include a negative sign with your
answer
Suppose the minimum wage in this economy is $8.70 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing
wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the
prevailing wage.
If the wage is not allowed to fall below $8.70 per hour, the size of the unskilled labor force is
workers are considered unemployed.
The unemployment rate is defined as the percentage of unemployed workers in the labor force:
Unemployment Rate = Unemployed
Labor Force
x 100
At a minimum wage of $8.70 per hour, the unemployment rate among unskilled workers is approximately
workers, and
unskilled
4
You're advising a democratic government, and the leaders ask you about what kind of labor market regulations it should consider. Its only goal--I really mean only!--is to keep the unemployment rate as low as possible.
It's considering a law that would make it expensive to fire workers, in order to reduce the number of workers entering the pool of the unemployed.
According to labor search theory, what effect would this have on the job separation rate? On the job hiring rate? On the average (or steady-state) unemployment rate?
Be sure to answer all three questions, and also answer this fourth question: Can you give this government clear advice to their precise question, or will your answer be a version of "It depends"?
Chapter 7 Solutions
EBK ECONOMICS TODAY
Ch. 7 - Prob. 7.1LOCh. 7 - Prob. 7.2LOCh. 7 - Prob. 7.3LOCh. 7 - Prob. 7.4LOCh. 7 - Prob. 7.5LOCh. 7 - Prob. aFCTCh. 7 - Prob. bFCTCh. 7 - Prob. cFCTCh. 7 - Prob. dFCTCh. 7 - Prob. eFCT
Ch. 7 - Prob. 1CTQCh. 7 - Prob. 2CTQCh. 7 - Prob. 1FCTCh. 7 - Prob. 2FCTCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16P
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