Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Chapter 5, Problem 4RQ
To determine
The relationship between workers and firms.
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Describe how workers and firms “marry” each other in the labor market when there are many types of jobs offering various levels of risk to their workers. What does the slope of the hedonic wage function measure?
What factors create the link between wages and productivity that is at the heart of efficiency wage models?
many individuals feel that they have little influence over the wage rate they receive, and that employers decide unilaterally what wage they will pay. How do you square this fact with the model of wage determination presented in this unit?
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- Need 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_forwardDescribe how the firm decides whether to offer a safe working environment or a risky environment.arrow_forwardWhat is Dual labor market theory?arrow_forward
- What 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_forwardExplain the hedonistic wage function in short with a diagram.arrow_forwardIn the labour-discipline model (LDM), the employer sets the wage to minimise the cost of effort. Using the LDM, illustrate and explain how a change in conditions affect the employee’s best response function (BRF) in the following scenarios: In relation to the hospitality sector (e.g. restaurant industry) in the US: a sharp increase in the pool of unemployed people due to a hiring freeze, combined with a rise in unemployment benefits.arrow_forward
- What are the endogenous variables in the labor market model?arrow_forwardDo you believe or think PPP(Public Private Partnership) could be a game changer in the post covid HR development?arrow_forwardThe 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:arrow_forward
- Describe Dual labor market theory?arrow_forwardThe curvature of the isoutility curve illustrates: A) the amount of safety that can be exchanged for wages on the labour market. B) a diminishing marginal rate of transformation between wages and job safety. a diminishing marginal rate of substitution between wages and job safety. D) the law of diminishing marginal returns applied to wages. E) the diminishing marginal rate of technical substitution between wages and job safety.arrow_forwardin c) Suggest solutions to the limitations of the Efficiency Wage Model.arrow_forward
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