labor economics

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labor economics

Suppose that there are two states (A and B) in a country. Workers can freely move from one state to the other and all labor is equally skilled. a) Depict graphically the two market equilibrium, clearly labeling the wage (use WA and WB) and employment that clears each market. b) If a country-wide minimum wage (WM) is set in both states such that Wm < WA, what will be the relationship between WM and WB? What will be the effect of such a wage requirement on the labor markets in the two states? c) Suppose state A decided to set their own minimum wage requirement (WMA) such that WMA > WA. Describe what would occur in the labor markets of the two states. d) After the markets adjust, suppos... click for more

Labor economics

Marlene will live for four more time periods. In the current period, she has the option of attending college. If she does, she pays 40,000 in direct costs for the period and gives up 50,000 in earnings (what she earns for each period if she does not attend college). She knows that after college she will work get paid 70,000 in period 2, $90,000 in period 3, and $110,000 in period 4. If her discount rate is 10%, would she attend college?

Labor economics

3. As a natural experiment to determine the effect of education on earnings, a researcher compares the schooling and educational attainment of two groups of people. The first consists of those that lived in a state that devoted a high percentage of its budget to postsecondary education. The second consists of those that lived in a state that devoted little money to education. The first is the treatment group and the second is the control group. (a) Assuming the researcher has information on the schooling, earnings, and state funding for higher education for a sample of people, how might this natural experiment be conducted? (b) Evaluate the strengths and weaknesses of this experiment.

Labor economics

According to compensating differential theory: (a) Should a job with health insurance pay more than a job without (holding all else constant)? (b) If population data were analyzed, it would likely show that wages are higher (on average) in the jobs that the theory of compensating differentials would predict to be lower. Why would this discrepancy exist? (c) Explain how an economist might solve the problem confronted in (b) and accurately estimate the compensating differential Explain in sufficient detail, providing an equation if necessary.