LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 12, Problem 5RQ
To determine
Explain why the asking wage makes worker indifference between searching and not searching.
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The below graph shows the optimal asking wage. Suppose another individual with the same wage opportunities is more “future-oriented”. Show how this would alter the graph. How will this affect the asking wage and the length of the job search?
The below graph shows the optimal asking wage. Suppose another individual with the same wage opportunities is more “future-oriented”.
Adjust the graph to show the impact this will have on the asking wage and the length of his job search:
The below graph shows the optimal asking wage. Suppose another individual with the same wage opportunities is more “present-oriented”. Show how this would alter the graph. How will this affect the asking wage and the length of the job search?
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- TRUE OR FALSE. When the wage rate increases by 20% & the quantity supplied of labor increases by 5%, then this type of labor is considered wage inelastic.arrow_forwardWhat relationship might be illustrated by a hedonic wage function: a) the relationship between the wage and a worker's race b) the relationship between the wage and the probability of injury faced by the worker c) the relationship between the wage and a worker's gender d) the relationship between the wage and a worker's skill level e) the relationship between the wage and a worker's agearrow_forwardTo what extent are flexible work arrangements a positive for workers? For employers?arrow_forward
- Profit-maximizing firms will hire additional units of a resource up to the point at which the marginal revenue product (MRP) of the resource equals its price. With multiple inputs, firms will expand their use of each until the marginal product divided by the price (MP/P) is equal across all inputs. What is the link between marginal revenue product and wages?arrow_forwardNeed help ASAP, will give thumbs up: Consider an empirical wage equation of the form: log(W) = a + b(EDUC) + c(EXP) + d(EXPSQ) + u where the components are defined as: W = hourly wage rate log() is natural logarithmic function EDUC = completed years of school EXP = work experience EXPSQ = years of work experience squared (i.e. EXP times EXP) u = unobservable determinants of the hourly wage rate With data on the relevant variables for a sample of workers, the parameters a, b, c, and d can be estimated. QUESTION: What does human capital theory predict about the parameters of this wage equation? ANSWER CHOICES: b>0, c>0, d>0 b>0, c>0, d<0 b>0, c<0, d>0 b<0, c>0, d<0 b<0, c<0, d>0 Answerarrow_forwardDefine the contingent worker?arrow_forward
- How does skill atrophy provide an explanation for differentiation in earnings?arrow_forwardWhen focusing on a married couple, one person’s non-labor income includes the laborearnings of his/her partner. Using a graph of budget constraints and indifference curves,describe what would happen to the labor supply of one spouse if the other experiences aninvoluntary job loss. Your answer does not depend on whether the spouse you’regraphing is initially supplying labor or not.arrow_forwardA worker is about to undergo a sequential job search. The federal government passes emergency legislation that will increase unemployment benefits by $600/week. As a result of the legislation we would expect: a. Job search to be longer and the worker will accept a higher wage b. Job search to be longer and the worker will accept a lower wage c. Job search to be shorter and the worker will accept a lower wage d. Job search to be shorter and the worker will accept a higher wagearrow_forward
- A worker is about to undergo a sequential job search. The federal government passes emergency legislation that will increase unemployment benefits by $600/week. As a result of the legislation we would expect: a. Job search to be longer and the worker will accept a higher wage b. Job search to be longer and the worker will accept a lower wage c.Job search to be shorter and the worker will accept a lower wage d. Job search to be shorter and the worker will accept a higher wagearrow_forwardConsider the job search behavior of an unemployed worker. There is a wage offer distribution, which is known to the unemployed worker. The unemployed worker draws one wage offer from that distribution each period and decides whether to accept or reject the offer. If she accepts, she is employed forever at that wage. If she rejects, she receives a fixed amount of unemployment insurance and draws another offer next period. Characterize and explain how the asking (or reservation) wage is determined. [Hint: Use a diagram and plot marginal cost of search versus the marginal revenue from search.] THE ANSWER SHOULD BE VERY CLEAR AND DETAİLED, THANK YOU!!!arrow_forwardWhat is the effect of an increase in the price of market goods on a worker’s reservation wage, probability of entering the labor force, and hours of work?arrow_forward
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