LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 6, Problem 4P
To determine
The effect of an increase in rate of depreciation on workers’ optimal amount of schooling.
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Suppose the skills acquired in school depreciate over time, perhaps because technological change makes the things learned in school obsolete. What happens to a worker’s optimal amount of schooling if the rate of depreciation increases?
Discuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.
Imagine that the wage-schooling locus is given by w(s)=s^(1/3). What will be the optimal level of education for an individual to take if next period’s earnings in any given time are worth 95% of current earnings for that individual?
Answer is s=20/57
I need step by step calculations
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- In what sense is education a type of capital?arrow_forwardSuppose that, on average, men earn $17 an hour and have an average of 15 years of schooling. Women earn $15 an hour and have an average of 14 years of schooling. If the estimated return to schooling for men is 0.30 (implying that each additional year of schooling translates into an additional 30 cents per hour) and the returns for schooling for women is 0.2, then the gender gap in schooling explains: 10% of the wage gap between men and women. 20% of the wage gap between men and women. 30% of the wage gap between men and women. 15% of the wage gap between men and women.arrow_forwardFind the utility-maximising levels of consumption and leisure. How much labour does the consumer - worker’s supply?arrow_forward
- State true or false with reason casual workers are not different from regular workers.arrow_forwardSuppose the following graph shows the earnings trajectory of college-educated workers (orange line) and of workers with only a high school diploma (blue line), through age 34. Use the grey quadrilateral (star symbols) to shade the area representing the direct costs of attending college for four years. Then use the purple quadrilateral (diamond symbols) to shade the area representing the opportunity cost of attending college for four years rather than entering the work force immediately after completing high school. Finally, use the green quadrilateral (triangle symbols) to shade the area representing the difference in earnings between college graduates and high school graduates between the ages of 22 and 34. Hint: Be sure that the coordinates of the end points of the quadrilaterals are exactly the same as the coordinates of the areas they are to cover. Once the quadrilateral is in place, click on it to show the value of the shaded area. EARNINGS AND COST (Thousands of dollars) 100 8 60…arrow_forward
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