LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 8, Problem 12P
(a)
To determine
Determine how the universal healthcare system would cause a greater amount of efficient turnover.
(b)
To determine
Determine whether defined-benefit or defined-contribution retirement plan allows more efficient turnover.
(c)
To determine
Determine the difference-in-difference estimate.
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Question 1
You are the human resource manager at a large organization. Each worker in your organization produces output valued at $15 per hour (ie. VMP = $15). You want to deter shirking and turnover by paying a deferred wage profile where the hourly wage is W = 4/5T, where T is tenure, or length of time that the person remains with the firm.
Draw the diagram of the deferred wage profile.
Solve for the breakeven point, or length of time the person would have to stay with the firm so that her wage would just equal their productivity.
Determine the length of time she would have to stay with the firm for her expected wage over that period to just equal her productivity (assume no discounting so that a dollar today is the same as a dollar in the future).
If the vast majority of the people start working with the firm at age 35, what mandatory retirement age would you pick to provide a termination data to that contractual agreement?
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True/False
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