LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 4, Problem 1P
a)
To determine
The effects of mandated benefits.
b)
To determine
The importance of workers’ valuation about the mandated benefits.
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This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D1 and D2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market.
Refer to Figure 18-4. Which of the following is a possible explanation of the shift of the labor-demand curve from D1 to D2?
Question 17 options:
The wage earned by automobile workers increased.
The opportunity cost of leisure, as perceived by automobile workers, decreased.
The price of automobiles increased.
Large segments of the population changed their tastes regarding leisure versus work.
The legislature in a state in the South passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the northern and southern states are very similar.The initial position of a supply-and-demand graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new, higher wage for workers in the northern state.Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the southern state.
Which of the following groups are better off as a result of the union action in the northern state? (select all that apply)
a) The original workers in the southern state
b) Workers in the northern state employed at the union wage
c) Employers in the northern state
d) Workers who find new jobs in the southern state
Consider the labour markets for skilled labour and unskilled labour.
The labour demand curve for skilled workers is given by w = e(150 - 5L)/100. The labour demand curve for unskilled workers is w = 50 - 2L. The labour supply for each of the two labour markets is given by L = 20.
The effort of firm's skilled workers depends on their wage according to the following schedule:
wage (w)
20
25
30
35
40
45
Effort (e)
16
24
30
34
36
36
a) Calculate the equilibrium employment, unemployment, and wage for unskilled workers.
b) Calculate the profit-maximizing contract (w,e).
c) Calculate the equilibrium employment, unemployment, and wage for skilled workers.
d) In a single labeled graph in (w - L), illustrate the labour market equilibria for skilled and unskilled workers.
e) Calculate the cumulative income distribution for each labour market by reporting the cumulative shares for the following percentiles: 50% and 100%.
f) In a single graph, construct the Lorenz curve representing labour…
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