LABOR ECONOMICS LOOSELEAF 8/E
8th Edition
ISBN: 9781264010516
Author: BORJAS
Publisher: MCG
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Question
Chapter 8, Problem 12P
(a)
To determine
Determine how the universal healthcare system would cause a greater amount of efficient turnover.
(b)
To determine
Determine whether defined-benefit or defined-contribution retirement plan allows more efficient turnover.
(c)
To determine
Determine the difference-in-difference estimate.
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Question 1
You are the human resource manager at a large organization. Each worker in your organization produces output valued at $15 per hour (ie. VMP = $15). You want to deter shirking and turnover by paying a deferred wage profile where the hourly wage is W = 4/5T, where T is tenure, or length of time that the person remains with the firm.
Draw the diagram of the deferred wage profile.
Solve for the breakeven point, or length of time the person would have to stay with the firm so that her wage would just equal their productivity.
Determine the length of time she would have to stay with the firm for her expected wage over that period to just equal her productivity (assume no discounting so that a dollar today is the same as a dollar in the future).
If the vast majority of the people start working with the firm at age 35, what mandatory retirement age would you pick to provide a termination data to that contractual agreement?
For each scenario below, explain how it will impact efficient turnover:(a) Universal healthcare is implemented.(b) General training is offered.(c) Specific training is offered.(d) Workers are given a defined-benefit retirement plan (Workers receive a fixed amount every yearafter they retire, but workers must work at the firm for at least 10 years)(e) Workers are given a defined-contribution retirement plan (The firm donates to a worker’sretirement fund, but the worker has full control over it)(f) Healthcare and retirement benefits stay with a worker as long as they remain with the organi-zation (ex. working at Target in Norman then moving to Target in Dallas)
Factor income is an earning concept
True/False
Chapter 8 Solutions
LABOR ECONOMICS LOOSELEAF 8/E
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