LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 7, Problem 2P
a)
To determine
The effect of indexing the minimum wage to inflation on wage inequality.
b)
To determine
The effect of increasing the benefit level paid to welfare recipient on wage inequality.
c)
To determine
The effect of increasing wage subsidies paid to firms that hire low-skilled workers on wage inequality.
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- Which one of the following is the most likely to be associated with an increase in the incidence of poverty? A) The Gini coefficient falls substantially. B) The number of single persons with children and of single pensioners has increased substantially. C) The real income of those in the top 20% of income earners falls by 10%. D) The number of people earning below the level of income support has decreased.arrow_forwardWhich of the following does not explain the rise in income inequality in the United States during the past four decades? An increase in minimum wages. Increased international trade with low-wage countries. Changes in technology. All of these answers have contributed to the rise in income inequality. A reduction in the demand for unskilled labor.arrow_forwardIn California, a welfare recipient is eligible for welfare benefits of $645. Benefits are reduced by 50 cents for every dollar of earnings. Consider Elizabeth, a resident of California, who can earn $10 per hour. a. If she works 10 hours, how much are her earnings, how much is her welfare benefit, and how much is her income? b. After Elizabeth works a certain number of hours, she does not receive any benefit at all. What is that number of hours? c. Use your answer to parts a and b to plot her budget constraint. d. Sketch a set of indifference curves consistent with Elizabeth's participating in the labor marketarrow_forward
- Let us consider Amanda can work a maximum of 60 hours per week, at a wage rate of $5 per hour. Welfare benefits are fixed at $200 per week, with a 100 percent tax back on labour earnings. Finally, the earnings supplement equals half the difference between an individual’s labour earnings and the benchmark earnings of $450 per week. This supplement can be collected only if the individual forgoes welfare benefits and works a minimum of 30 hours per week. Draw Amanda's budget constraint, and analyze the work decision. (Make sure to graph)arrow_forwardWhat is the poverty trap? Group of answer choices A)The situation where government assistance can result in a low or zero net gain for working. B)The situation where a person becomes unemployed and cannot find another job. C)The situation where a person becomes disabled and cannot work. D)The poverty trap occurs when a person is poor, and structural discrimination prevents that person from escaping poverty.arrow_forwardWhat factors contribute to wage inequality in the labor market?arrow_forward
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