LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 10, Problem 3P
To determine
Demonstration of the trade-off involved when deciding to join a union.
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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?
Figure demonstrates some of the trade-offs involved when deciding to join a union.a. Provide a graph that shows how the presence of union dues affects the decision to join a union. (Assume all workers pay a flat rate for dues.) Show on your graph how the presence of union dues may lead the worker to be less inclined to join the uni on.b. Suppose in addition to higher wages the union negotiates a 10 percent employer contribution to a defined contribution pension plan. Provide a graph that incorporates this retirement benefit into the decision of whether to join a union. Show on your graph how additional fringe benefits such as a retirement plan may cause the worker to be more inclined to join the union.
Reframe the theory of employment discrimination in light of behavior over time data.
Chapter 10 Solutions
LABOR ECONOMICS
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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- suppose you are hiring a worker for your firm. you advertise a position for $50,000, but an applicant offers to work for 40,000. Should you jump to this offer?arrow_forwardExplain and discuss the significance of the Efficiency Wage Theory and how it may result in discrimination in the workplace.arrow_forwardIf the place of employment is not unionized and there are no provisions in the employment contract concerning termination of employment, which of the following would not be within the rights of the employer and therefore actionable by the employee? An employee is dismissed because he was found stealing goods from his employer, and he was given neither notice nor pay in lieu of notice. An employee is dismissed because there is no more work to do and is given neither notice nor pay in lieu of notice. An employee is dismissed because his employer doesn't like his disposition, and he is given reasonable pay in lieu of notice. An employee is dismissed for incompetence and is given neither notice nor pay in lieu of notice.arrow_forward
- Suppose the union’s resistance curve is summarized by the following data. The union’s initial wage demand is $10 per hour. If a strike occurs, the wage demands change as follows:Length of Strike: Hourly Wage Demanded1 month $92 months 83 months 74 months 65 or more months 5Consider the following changes to the union resistance curve and state whether the proposed change makes a strike more likely to occur, and whether, if a strike occurs, it is a longer strike.a. The drop in the wage demand from $10 to $5 per hour occurs within the span of two months, as opposed to five months.b. The union is willing to moderate its wage demands further after the strike has lasted for six months. In particular, the wage demand keeps dropping to $4 in the sixth…arrow_forwardSuppose that the representative worker’s utility function takes the form = . Show that, if the union maximises expected utility, and unions and firms bargain according to the monopoly union model, the equilibrium level of employment declines as the value of the parameter γ increases.arrow_forward5. Exclusive, or craft, unions - Reducing labor supply Consider a small town economy with only two sectors: coal mining and logging. Both sectors are perfectly competitive, and workers are equally able and willing to work as miners (coal industry) and lumberjacks (logging). Only outside companies demand the coal and wood produced in the city, so changes in the domestic labor market do not affect the product demand curve in either sector. Suppose a union forms in the logging industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers. Show the effect of unionization in the logging sector on the labor market for miners. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. (? Labor supply Labor demand Labor supply Labor…arrow_forward
- Suppose a group of high school friends work at the same fast food restaurant. They all dislike the manager because she doesn’t allow them to swap shifts with one another whenever someone has a big exam to study for or a date. One of the friends suggests that they all agree to walk out if the manager doesn’t change her policy. Which of the following is the most likely outcome of such a walkout? multiple choice Wages will remain constant and the workers will be replaced. The workers will all be replaced, but wages will increase to avoid similar problems in the future. Wages will increase due to the unified pressure of all the workers. Wagesarrow_forwardConsider discrimination in employment. Suppose dark-haired employees don't like working with blonde employees. Could this discrimination explain lower wages for blond employees? If such a pay differential existed, what would an entrepreneur who wants to maximize profits do? If there were many entrepreneurs with the same strategy, what would happen over time?arrow_forwardQuantity of Labor Supplied Wage Total Cost of Labor Marginal Cost of Labor Marginal Revenue Product 50 $10 $500 $10 $30 100 $12 $1200 X $25 150 $15 $2250 $21 $21 200 $18 $3600 $27 $18 250 $20 $5000 $28 $15 Use the labor market data for a monopsony employer above. Find the wage and quantity of labor the firm will hire. Question 10 options: $12; 100 $25; 100 $15; 150 $21; 150arrow_forward
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