Shown below in Figure 8-9 are zero-profit isoprofit curves .... Traditionally, such benefits have not been counted as part of an employee's taxable income. Also ...
Suppose an individual's preferences for leisure and income can be represented by a Cobb- ... Also assume initially that the person has no nonlabor income.
Chapter 3 The Demand for Labor 43 ... break down monopoly power, do away with regulation that was generally ineffective, and ... In the short run suppose the level of capital is fixed at 16 units. ... demand curve for labor under competition.
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Using the lessons of Chapter 5, review why women are less likely to be offered firm- ... Chapter 10 Worker Mobility: Migration, Immigration, and Turnover 151.Missing:
Now suppose that the worker plans to use a reservation wage strategy. What is the ... Page 2 ... Consider a firm with a regular history of using large temporary layoffs to meet seasonal changes in ... and household production time at $5.
Suppose the relationships between wages, experience, occupation, and ... Assume that, on average, EXP = 12 for men and 8 for women, and that women are ...
according to data published in The Wall Street Journal (August 17, 1988, p. 31), the average annual cost of tuition ... Page 3 ... To see the effects of lowering educational costs in the context of the signaling model of education, consider Figure ..
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*32b. If the price of the product the firm sells falls to $1, find the new employment level. *32c. Suppose that at the employment level found in 28a, the firm only paid the workers a money wage of $20 because it was recovering an earlier investment in specific training. Find the new employment level when the product price falls to $1.
Effects of Equal Pay Laws 33. Consider a firm that incurs expenditures for specific training in the current period equal to 3,000 per worker in real terms. During the training period, workers and the firm share the cost of training. The firm pays its workers a real wage of 10,500 and their marginal product is 11,000. Next year, after the training is over, the marginal product is expected to rise to 16,000, and then to 17,000 the year after that. The interest rate is 6%. 33a. Robin, a college senior, applies for the job and promises to stay two years after the training program is complete. Robin has other offers to work at 11,500, but they do not offer any training. If the firm wanted to recover all its training costs by the time Robin leaves, what would be the maximum wage it could offer in the post-training years? Assume an equal wage in the years following training. 33b. Would the firm be likely to attract Robin with this offer? 33c. A short time later, Ann also applies to this firm. She is a comparable applicant in all ways except that she plans to stay only one year after training is complete. What would be the maximum wage the firm could offer Ann in the post-training year if they want to recover their training investment? 33d. Assuming she has had offers similar to those made to Robin, would the firm be likely to attract Ann with its offer? 33e. Suppose the firm is required by law to pay workers who do comparable jobs the same wage. Discuss the likely effects on Ann.
Effects of Minimum Wage Laws 34. In April 1990, a lower minimum wage was instituted for teenagers. It applied to 16- to 19-year-olds for the first six months of their first job. 34a. How would you predict such a youth subminimum wage would affect the likelihood of teens receiving on-the-job training? Would general or specific training opportunities be most affected? 34b. Construct a simple numerical example to illustrate your reasoning.
Effects of Subsidized Training 35. Under the Job Training Partnership Act, the government substantially subsidized employer costs incurred in training certain disadvantaged groups in the population. Refugees from the Vietnam War, for example, were a group targeted by the program, although other groups also qualified. 35a. How would this program affect a firm’s employment/hours choice? 35b. How would this program affect the job stability of the targeted groups?
Ehrenberg/Smith • Modern Labor Economics: Theory and Public Policy, Tenth Edition
Monopsony *36. Consider a monopsonist with a production function given by the equation Q = LK. The firm’s marginal product is given by the equation MPL = K. The labor supply curve for this market is given by the equation W = 3L. Suppose the firm has monopoly power in the output market and faces a demand curve for its product given by the equation P = 64 − Q. The level of capital is held constant at 3 units in the short run. The price of capital is $5 per unit. *36a. Find the equation for the marginal revenue product of labor (MRPL). *36b. What simplifying assumption about the firm’s production process was made in this problem that is not typically made when examining the firm’s short-run demand for labor? Why do you suppose it was made in this problem? *36c. Find the equation for the marginal expense of labor (MEL). 36d. Calculate the optimal level of labor for this firm. 36e. Calculate the wage paid to the typical worker and the resulting output, price, and profits for the firm. 36f. Suppose a minimum wage of $30 is mandated in this market. Find the optimal employment level for the monopsonist. Compare your result with the answer to 36d. Finally, suppose the minimum wage was set at $66. Find the optimal employment level.