Contemporary Labor Economics
11th Edition
ISBN: 9781259290602
Author: Campbell R. McConnell, Stanley L. Brue, David Macpherson
Publisher: McGraw-Hill Education
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Question
Chapter 3, Problem 6QS
To determine
The responsible factors for an increase in the participation rates of married women.
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Workers in countries such as Sweden and Germany work fewer hours per week, on average, than do workers in the United States. Does this mean that Swedes and Germans are lazier than Americans? Explain how laziness could be interpreted in the context of the work-leisure choice model developed in this chapter. What other information might you want to gather to determine whether Swedes or Germans were indeed less work oriented that Americans?
Illustrate (using a labor-leisure choice diagram) how a firm may induce a typical employee to lengthen his work week voluntarily by paying him premium wage rates for overtime hours.
what happens in the work-leisure model, when the wage rate is decreasing and income effect is stronger than substitution effect?
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- What factors influence an individual's decision to allocate time between work and leisure in the context of the work-leisure model?arrow_forwardWhy does a worker allocate his or her time over the life cycle so as to work more hours in those periods when the wage is highest? Why does the worker not experience an income effect during those periods?arrow_forwardExplain in detail Discuss the possible substitution effect and the income effect of an increase in income on leisure time.arrow_forward
- Suppose John has 24 hours in a day. He can spend his time either working at his job where he earns $20 per hour, or he could spend it doing leisure (everything else, including sleeping). a) Using the labor-leisure choice model, draw a graph that shows his optimum labor supply would be 10 hours a day (with $0 non-labor income). Make sure your graph is completely labeled. b) On the same graph, show what would happen if he receives $100 a day in non-labor income. Breifly explain what is happening in words.arrow_forwardSuppose John has 24 hours in a day. He can spend his time either working at his job where he earns $20 per hour, or he could spend it doing leisure (everything else, including sleeping). a) Using the labor-leisure choice model, draw a graph that shows his optimum labor supply would be 10 hours a day (with $0 non-labor income). Make sure your graph is completely labeled. b) On the same graph, show what would happen if he receives $100 a day in non-labor income. Breifly explainarrow_forwardJoanne states: "The best way to increase the wages of workers is to increase workerproductivity." Is Joanne correct? Why or why not?arrow_forward
- Consider the following labor-leisure choice model. Utility function over consumption (C) and leisure (L) U(C.L) = (1/3L1/3 Total hours: H = 40 Labor hours: NS = H - L Non-labor income: π = 30 Lumpsum tax: T = 10 Hourly wage: w = 4 Suppose the hourly wage changes to w = 3. What is the substitution effect of this change on labor supply? A. +2.65 B. -2.65 C. +3.48 D.-3.48 E. None of the abovearrow_forwardThe following utility function represents Rose's preference over consumption and leisure u(c, l) = √c + 4√l. Rose receives a real wage of 15 and a non-wage income of 2. As a qualified recipient, Rose gets an additional non-wage income of 5 from the government through a cash transfer program. What is Rose's optimal choice of labor supply?arrow_forwardIf a negative income tax is adopted, work effort will decrease if 1. 2. 3. Leisure is inferior Leisure is normal The income effect offsets the substitution effect (a) 1 only (b) 2 only (c) 3 only (d) 1 and 3 only (e) 2 and 3 only Use a labor-leisure choice diagram to explain your answer.arrow_forward
- What happens to the probability that a particular person works when the wage rises? Does such a wage increase generate an income effect?arrow_forwardA significant number of economists assume that that typical workers initially increase their labor supply when their wage increases but ultimately they decrease their labor supply when their wage gets higher. Show on two different graphs with indifference Curves and budget line, showing labor income tradeoff, how a worker that increases its labor supply when wage increases from a worker that decreases his labor supply. Do you think the assumption above is a reasonable assumption? Explain your answer.arrow_forwardA significant number of economists assume that that typical workers initially increase their labor supply when their wage increases but ultimately they decrease their labor supply when their wage gets higher. Show on two different graphs with indifference curves and budget line, showing labor income tradeoff, how a worker that increases its labor supply when wage increases from a worker that decreases his labor supply.Do you think the assumption above is a reasonable assumption? Explain your answer.arrow_forward
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