Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 2, Problem 6P
To determine
The link between education and salaries.
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Suppose a researcher is using a panel data set on n = 10,000 workers over T = 20 years (from 2000 through 2019) that contains the workers’ earnings, sex, education, and age. The researcher is interested in the effect of education on earnings. Give some examples of unobserved person-specific variables that are correlated with both education and earnings. Can you think of examples of time-specific variables that might be correlated with education and earnings? How would you control for these person-specific and time-specific effects in a panel data regression?
The following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra.
We estimate the effect of rising health insurance premiums on wages, employment, and the distribution of part‐time and full‐time work using variation in medical malpractice payments driven by the recent “medical malpractice crisis.” We estimate that a 10% increase in health insurance premiums reduces the aggregate probability of being employed by 1.2 percentage points, reduces hours worked by 2.4%, and increases the likelihood that a worker is employed only part time by 1.9 percentage points. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3%.
This finding is consistent with the presence of ____.
Summarize the five most commonly used demographic variables.
Chapter 2 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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- What is statistical discrimination? Why do employers use group membership as an indicator of a worker’s productivity? What is the impact of statistical discrimination on the wage of the affected workers? Must statistical discrimination reduce the average wage of blacks or women?arrow_forwardMarie is about to choose a career path. She can either become a certified public accountant or a high school teacher. Marie lives two periods. In the first, she gets an education. In the second, she works in the labor market. If Marie becomes a certified public accountant, she will spend $45,000 on education in the first period and earn $500,000 in the second period. If she becomes a high school teacher, she will spend $30,000 on education in the first period and then earn $400,000 in the second period. Suppose Marie can lend and borrow money at a 5 percent rate of interest between the two periods. a) Which career will she pursue? b) What if she can lend and borrow money at a 15 percent rate of interest?arrow_forwardWhich of the following is an example of an objective assessment of employee performance? Sarah, a software engineer, is judged by her ability to collaborate with her co-workers. Steven, an architect, is judged by the creativity of his designs. O Janet, a teacher, is judged by her ability to identify and correct problems in her classroom. Darrell, a car salesman, is judged by the number of cars he has sold. Lisa, a media producer, is judged by the quality of the videos and simulations she produces.arrow_forward
- How should one interpret the fact that workers with a lot of seniority earn more than newly hired workers?arrow_forwardSuppose a small country called "Mamidas" is experiencing an aging population, leading to an increase in the number of retirees and a decline in the labor force participation rate. As a result, the government decides to implement an antipoverty policy to provide financial support to the elderly population. The policy aims to ensure that retired individuals have a minimum income to cover basic living expenses. Given the following information: The total number of retirees in Mamidas is 10,000. The poverty threshold for retirees is set at $20,000 per year. The average annual retirement income before the antipoverty policy is $16,000 per retiree. Calculate the total annual cost of the antipoverty policy for the government of Mamidas. Assume for this case that all retirees earn the average income.arrow_forwardSuppose there are two types of jobs in the labor market: “safe” jobs and “risky” jobs. Describe how the worker decides whether to accept a safe job (where she cannot be injured) or a risky job (where she will certainly be injured).arrow_forward
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