Suppose two workers employed by Z Co., A and B, will each receive some on-the-job training. The cost of training each worker, which includes the cost of instruction and the worker's reduced productivity during the training period, is $20. Assume the training will be done in period 1, and each worker is employed for two periods. Without training the marginal revenue product of each worker would be $100 in each period. The training received by worker A increases his marginal revenue product by $25, but only at Z Co., not at other firms. The training received by worker B increases his marginal revenue product by $25 at Z Co. and at all other firms. Table 13.2 shows the salary profiles at Z Co. Which profile is most likely for each of these workers? Explain exactly why.

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Problem 1. Suppose two workers employed by Z Co., A and B, will each receive some on-the-job training. The cost of training each worker, which includes the cost of instruction and the worker's reduced productivity during the training period, is $20. Assume the training will be done in period 1, and each worker is employed for two periods. Without training the marginal revenue product of each worker would be $100 in each period. The training received by worker A increases his marginal revenue product by $25, but only at Z Co., not at other firms. The training received by worker B increases his marginal revenue product by $25 at Z Co. and at all other firms. Table 13.2 shows the salary profiles at Z Co. Which profile is most likely for each of these workers? Explain exactly why. Table 13.2 Different possible salary profiles for workers A and B Salary profile First-period wage Second-period wage 1 100 100 234 80 125 90 115 125 80 Problem 1. Suppose two workers employed by Z Co., A and B, will each receive some on-the-job training. The cost of training each worker, which includes the cost of instruction and the worker's reduced productivity during the training period, is $20. Assume the training will be done in period 1, and each worker is employed for two periods. Without training the marginal revenue product of each worker would be $100 in each period. The training received by worker A increases his marginal revenue product by $25, but only at Z Co., not at other firms. The training received by worker B increases his marginal revenue product by $25 at Z Co. and at all other firms. Table 13.2 shows the salary profiles at Z Co. Which profile is most likely for each of these workers? Explain exactly why. Table 13.2 Different possible salary profiles for workers A and B Salary profile First-period wage Second-period wage 1 100 100 234 80 125 90 115 125 80

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Lets go through each profile and calculate the costs and benefits to determine the most likely salary profile for workers A and B Profile 1 FirstPerio... View the full answer