4. Asymmetric information and labor marketsArjun is the manager of a factory. Workers at the factory are assigned to one of two tasks, one of which requires skilled labor and one of whichrequires unskilled labor. Because skilled workers earn a higher wage than unskilled workers, everyone who applies for a job says they're skilled.Arjun's challenge is to figure out who is actually a skilled worker and who is an unskilled worker.Suppose that Arjun would like to use the economic concept of signaling to separate out worker types.Which of the following scenarios illustrates this concept?Skilled workers enroll in an online certification course to demonstrate their ability.Skilled workers pay to take a certification course to demonstrate their ability.Arjun voluntarily pays all workers a higher wage in hopes of attracting and retaining more productive workers.Arjun implements a test to determine whether applicants are skilled or not.Suppose, instead, Arjun considers paying efficiency wages to increase the factory's profitability.True or False: Efficiency wages are set below the average industry wage and are intended to give the firm implementing them a competitive advantageover rivals.TrueFalse

According to the labor economics theory of efficiency wages, companies should pay their employees…

Answered: 4. Asymmetric information and labor…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.3P

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2. Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of ẞ of normal workers, and the remaining 1-a - B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, B) are all workers employed in equilibrium? For which values (a, ẞ) only the normal workers and lazy workers employed, and for which values of (a, B) are only the lazy workers employed? Explain your findings!
5. Using a labour-leisure model, show how the introduction of time and a half for overtime (i.e. the firm must pay a hourly wage 50% higher for any hours of work that exceed 8 hours per day) affect the hours work decision and the level of satisfaction. Assume the worker was working 10 hours per day prior to the government regulation.
Q.7 Given following separate equations. Variable educ measures years of schooling, while age indicates age of the individual. Wage measures monthly wage (in hundred Kina) of individual. log(wage) = -0.9048 + ₁.educ (1) log(wage) = -0.6742 + ₂.log (age) (2) wage = wage -0.8709+ B3. educ (3) -0.7635+ B4. log (educ) (4) = What is the interpretation of B₁, B₂, B3, B4?
3. In the upcoming year, the income from your current job will be $50,000. There is a 0.5 chance that you will keep your job and eam this income, and 0.2 chance that you will get a rise and earn 75,000. However, there is 0.3 chance that you will be laid off, putting you out of work for a time and forcing you to accept a lower paying job. In this case, your income is $25.000. The expected value of your income is thus $47,500. a) If your utility function has the formula 5001 - 0.0002/, determine the risk premium associated with this lottery. b) Provide an interpretation of the risk premium in this particular example.
3. In the upcoming year, the income from your current job will be $50,000. There is a 0.5 chance that you will keep your job and earn this income, and 0.2 chance that you will get a rise and earn 75,000. However, there is 0.3 chance that you will be laid off, putting you out of work for a time and forcing you to accept a lower paying job. In this case, your income is $25.000. The expected value of your income is thus $47,500. a) If your utility function has the formula 5001 - 0.0002f, determine the risk premium associated with this lottery. b) Provide an interpretation of the risk premium in this particular example.
6
2. Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of 3 of normal workers, and the remaining 1 - α- B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, ß) are all workers employed in equilibrium? For which values (a, ß) only the normal workers and lazy workers employed, and for which values of (a, ß) are only the lazy workers employed? Explain your findings!
If you an? out of school but working part time, are you considered employed or unemployed in U.S. labor statistics? If you are a full time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greater at Wal-Mart are you considered employed or not in the labor force?
5 ONLY part Q4b, answer for part a is given
Title 1. Suppose that the indifference curves between consumption and leisure are concave to the origin.... Description 1. Suppose that the indifference curves between consumption and leisure are concave to the origin. How many hours will a person allocate to leisure activities? 2. Suppose that the price of goods purchased in the marketplace rises. What is the impact of this price increase on the worker's reservation wage, on the worker's probability of entering the labor force, and on hours of work? 3. What happens to a worker's desired hours of work if employers pay an overtime premium equal to "time and a half'(that is, 1 .5 times the straight-time wage) for any hours worked in excess of 40 hours? What would happen to hours of work if the overtime premium were raised to double the straight-time wage?
1. Kelly spends most of her time taking care of her home and children, but she helps in her husband's computer software store 4 hours a day from Monday to Friday. Which category of employment status fits Kelly’s situation? 2. Ashton is 15 years old and helps out in his father’s grocery store 4 hours a day from Monday to Friday. Which category of employment status fits Ashton’s situation? 3. Justin is a full-time college student looking for a job. Which category of employment status fits Justin’s situation?
6. Mickey and Minnie live in Anaheim. Mickey's net present value of lifetime camings in Anaheim is $500,000, while Minnie's is S150,000, The cost of moving to Orlando is $15,000 per person. In Orlando. Mickey's net present value of lifetime earnings would be $550,000, while Minnie's would be $125,000. a) If Mickey and Minnie choose where to live based on maximizing their joint income, will they stay in Anaheim or move to Orlando? b) Which of the following is Mickey (circle): Tied-mover Tied-stayer Neither e) Which of the folowing is Minnie (cirele): Tied-mover Tied-stayer Neither d) What is the maximum moving cost they would jointly be willing to pay to move to Orlando, if they decide to move?

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