Questions and Answers of Contemporary Labor Economics

In 2019, 163.5 million workers were in the U.S. labor force, of which 6.0 million were unemployed. In view of these facts, how can economists say that labor is a scarce resource?
Indicate whether each of the following statements pertains to microeconomics or macroeconomics:a. The unemployment rate in the United States was 3.7 percent in 2019.b. Workers at the Sleepy Eye grain
The tax cuts of the Trump administration presumed that income tax cuts would stimulate incentives to work and thereby increase economic growth. Demonstrate this outcome with a work–leisure diagram.
Steve Slacker is age 25, has an MBA degree, but is not working. Instead he is living at a major ski area, using the $$3$,000 per week he gets from his wealthy family. The family, however, seeing
In 2018 the United States had a population of 327 million, of which 68 million were either under 16 years of age or institutionalized. Approximately 162 million people were either employed or
Floyd is now working in a job that pays $$28$,000 per year. He is contemplating a one-year automobile mechanics course that costs $$1$,000 for books and tuition. Floyd estimates that the course
The U.S. Office of Management and Budget has estimated that the tax-exempt status of fringe benefits such as pensions and group insurance reduced tax revenue to the Treasury by about $460 billion in
List and discuss factors that help explain why public sector employment rose faster than private sector employment between 1950 and 2018. At what levels of government has public sector employment
Examine critically this statement: “Unemployment in the United States can be resolved quickly and efficiently. The government should simply provide jobs for everyone who wants to work who cannot
Do you expect the natural rate of unemployment to(a) Increase,(b) Decrease,(c) Remain at the present level over the next decade? Explain your reasoning.
Why are nominal wages inflexible downward? What is the implication of this characteristic for the ability of involuntary demand-deficient unemployment to persist for a considerable length of time?
Suppose you are an economic adviser to the president, who has asked you to design a program to reduce the amount of unemployment associated with displaced workers. What major elements would your plan
Define the term structural unemployment and distinguish it from frictional and demand-deficient unemployment. Why might structural unemployment fall when demand-deficient unemployment declines?
Use the basic model shown in Figure 18.5 to illustrate graphically each of the following:(a) Demand-deficient unemployment(b) Temporary increases in output and employment beyond their natural, or
What factors tend to understate the extent to which the official unemployment rate accurately measures the degree of economic hardship in the nation? What factors lead some observers to conclude that
U.S. productivity growth accelerated in the second half of the 1990s. How do you account for this speedup? Why is it still impossible to know if this speedup is the start of a long-term trend or
Comment on each of the following statements:a. “Although most highly productive companies are profitable, not all profitable companies are highly productive.”b. “Increased public demand for
Describe and explain the cyclic changes that occur in labor productivity. Of what significance are these changes?
Briefly comment in quantitative terms on the long-term trend of labor productivity in the United States; cite the three primary factors that contributed to that growth, and indicate the relative
Discuss the relationship between aggregate productivity growth and price inflation.Draw a diagram (similar to Figure 17.8), putting average annual productivity growth on the horizontal axis and
Explain this statement: “High wage rates are both an effect and a cause of high labor productivity.”
How do you account for the close correlation between changes in the rate of productivity growth and changes in real wage rates for the economy as a whole?Does this relationship also hold true on an
How is labor productivity defined? Comment on the shortcomings and advantages of the Bureau of Labor Statistics index of labor productivity.
In light of the information presented in this chapter, answer Question 11 at the end of Chapter 4. Question 11 Chapter 4 As the following diagram indicates, the distribution of ?ability? (here
Which two of the text’s possible explanations for increasing wage and salary inequality seem least consistent with the following fact? The distribution of earnings has become more unequal within
What has happened to the location of the Lorenz curve of annual earnings over the past 35 years? Make a case that the Lorenz curve will shift leftward over the next 35 years. Make a case that it will
Explain how both ability and family background can directly influence earnings, independently of education and training. How do ability and family background indirectly determine earnings through the
Critically evaluate this statement: “Lifetime earnings are less equally distributed than annual earnings.”
Why do people who have more formal education than others also in general tend to receive more on-the-job training during their careers? What is the implication of this fact for the distribution of
Speculate about why a given Gini coefficient is compatible with more than one particular Lorenz curve. Illustrate graphically.
Do you think internal labor markets enhance or detract from efficiency? How might one argue that the realization of dynamic efficiency is more important than achieving static efficiency? Do you agree?
Explain the following statement: “Unions are both a consequence and a cause of internal labor markets.” Why might the presence of internal labor markets in a firm encourage unionization?
How does a worker search for a better job in an internal labor market? What is the employer’s search process within internal labor markets?
How do you explain the existence of internal labor markets? What are their advantages to employers? To workers?
What is meant by the term acceptance wage? How does a job seeker determine his or her acceptance wage? Why might the acceptance wage for one new college graduate differ from that of another new
What are the benefits and costs of job search? Why don’t job seekers endlessly search for a higher wage offer?
Although the labor market opportunities for women have improved greatly over the past 30 years, poverty has become increasingly concentrated among women. How can you reconcile these two developments?
Critically evaluate each of the following statements:a. “Affirmative action plans have not worked; there is no evidence that they have increased African-American or female employment and
Some economists have argued that the unemployment effects associated with the minimum wage have been greater for African-Americans than for whites. Explain why this might be the case.
“Wage differences between men and women reflect not discrimination but rather differences in job continuity and rational decisions with respect to education and on-the-job training.” Explain why
It has been argued that to correct the inequalities of past discrimination, African-Americans and females should be given preference in employment and promotion. Do you agree? In the famous Bakke
There has been considerable controversy over the fact that certain pension plans into which males and females make equal contributions pay smaller monthly benefits to women than to men on the grounds
Table 14.2 reveals significant earnings differences by gender and race at each level of education. What nondiscriminatory factors might explain part of the earnings differences between females and
Is the following statement true or false? If it’s false, explain why. “The unemployment rates for white females and African American men are considerably higher than the rate for white men.”
Explain the following statement: “In the taste for discrimination model, discrimination is practiced even though it is costly to do so. But in the statistical discrimination model, it is clear that
What is statistical discrimination and why does it occur? The theory of statistical discrimination implies that discrimination can persist indefinitely, whereas the taste for discrimination model
Women have increased the amount of education they have achieved relative to men, and average years of schooling completed are now approximately the same for males and females. Human capital theory
How might each of the following be interpreted as an example of rent provision by government?a. State laws require that out-of-state big-game hunters be accompanied by one of a limited number of
Evaluate this statement: “Profit-maximizing firms lack an incentive to provide job safety, and consequently, the federal government must intervene legislatively to protect workers against the
Show graphically how an increase in the minimum wage might affect employment in(a) A competitive labor market(b) A labor market characterized by monopsony.
Explain each of the following statements:a. “The Wagner Act of 1935 reduced the costs of providing union services and thereby increased the number of union members.”b. “The Wagner Act of 1935
Explain why a draft system might cause the U.S. military to overemploy labor and underemploy capital (from society’s perspective). Speculate about why the army increasingly contracts out
Speculate about the reason(s) for each of the following facts about public sector pay:a. The pay premium received by federal employees declined in the middle and late 1980s.b. Local governments tend
Comment on this statement: “In general, federal government employees are underpaid compared to similar private sector workers. This is due to the monopsony power of government.”
List and discuss factors that help explain why public sector employment rose faster than private sector employment between 1950 and 2014. At what levels of government has public sector employment
What has been the impact of deregulation on the relative wages and employment of unionized workers in the airline and trucking industries? What factors help explain the difference in outcomes between
Would our economy function better if it were union-free? Explain your answer. Provide a counterargument to your position.
Describe the various avenues through which unions might alter the distribution of earnings. On balance, do unions enhance or mitigate wage dispersion?
In what specific ways might the presence of a union raise productivity within a firm? Use the exit mechanism and voice mechanism concepts in your response.
“There is an inherent cost to society that accompanies any union wage gain.That cost is the diminished efficiency with which labor resources are allocated.”Explain this contention. Do you agree?
Indicate the amount of work time lost each year because of strikes. Cite circumstances under which the amount of work time lost during a specific strike might be a poor indicator of the amount of
Comment on each of the following statements:a. “Unions tie the hands of management and inhibit efficient decision making.”b. “Unions contribute to economic efficiency in that union wage
Compare the size of the fringe benefits received by union and nonunion workers and indicate why unions might be responsible for any differences.
Evidence suggests that the union wage advantage varies directly with the proportion of a given industry that is organized. Why is this?
What is the commonsense basis for expecting a union wage advantage? Explain how each of the following differences between union and nonunion firms might complicate one’s determination of whether
What role do information differences play in causing strikes?
Are strikes inefficient for the union and firm? Explain.
Explain the difference between efficient contracts and strongly efficient contracts.
How can both the union and the firm be better off by bargaining over the wage rate and employment rather than just the wage rate?
Assume that a union’s utility depends on only the wage rate and not the level of employment. In this case, what will be the outcome under the efficient contracts model?
Describe the various bargaining structures that exist in the United States. What might be the advantages of multi employer bargaining to a union? To employers?What is pattern bargaining?
Summarize the organizational structure of the American labor movement, indicating the functions of the AFL–CIO, Change to Win, the national unions, and the local unions.
Why have unions evolved? To what extent is the civilian labor force unionized?Indicate the(a) Industrial(b) Occupational distribution of union members.Why are relatively fewer white-collar workers
Analyze this statement: “U.S. tariffs on imported products from low-wage foreign nations create an incentive for migration of low-skilled immigrants into the United States.”
If one believes in free international trade, then to be consistent, must one also advocate unrestricted international migration of labor?
Is it consistent to favor the free movement of labor within the United States and be opposed to immigration into the United States?
Comment on this statement: “If we deported all undocumented persons who are now in the United States, our total national unemployment would decline by the same number of people.”
How might a wage differential between two regions be reduced via movements of capital to the low-wage area?
Use the variables in Equation (9.1) to cite at least two reasons why it may be rational for a family to migrate from one part of the country to another, even though the hypothetical move produces a
Why are people who possess specific human capital less likely to change jobs, other things being equal, than those who possess general human capital? Does this imply that people who possess large
What is meant by the term beaten paths? How do such paths increase Vp in Equation (9.1) and thereby increase the likelihood of migration? Equation 9.1 v, = E, – E, Σ (1 + i)" (1 + i)" n= 1 n=1
Suppose that(a) Employers must pay higher wages to attract workers from wider geographic areas and hence higher wages are associated with longer commuting distances (less of the amenity “closeness
Explain how each of the following relates to wage differentials: (a) Seniority provisions,(b) Varying state licensing requirements for occupations,(c) Racial segregation,(d) Regional
Speculate about why the average hourly wage rate paid by manufacturing firms to production workers is so much lower in Mississippi than in Michigan (Table
What is the hedonic theory of wage differentials? Discuss the characteristics of a normal-profit isoprofit curve. Combine isoprofit curves with worker indifference curves to explain how two workers
Explain how the theory of investment in human capital relates to the notion of noncompeting groups and how the latter relates to the presence of equilibrium wage differentials.
Analyze why college professors generally earn less than their professional PhD counterparts who are employed by corporations.
Suppose all workers and jobs in a hypothetical economy are homogeneous.Explain why no wage differentials would exist if this economy were perfectly competitive and information and mobility were
As an employer, suppose you find it costly to monitor employee effort 100 percent of the time. What compensation options are available to ensure that you get appropriate levels of employee effort?
What are stock options? How do they relate to the principalagent problem?
How might payment of an efficiency wage(a) Reduce shirking by employees(b) Reduce employee turnover? What is the implication of the efficiency wage theory for unemployment? In what way are piece
Discuss the following statement in relationship to(a) The tournament theory of executive pay(b) The “World of Work” 7.2 on faculty tenure: “The new economics of personnel rationalizes whatever
People often sell goods (or raffle tickets) as part of a fund raising project.These projects typically offer valuable prizes to those who sell over a fixed number of units. Often a grand prize, like
Speculate on what actions workers might take to resolve a free rider problem arising from a profit-sharing plan.
Demonstrate graphically why someone guaranteed an annual salary might choose to work fewer hours than someone who could earn that same amount through hourly pay. Reconcile your answer with the fact
In Figure 7.6 the reduction in the cost of fringe benefits resulted in an increase in the amount of fringe benefits and a reduction in the wage income received. Figure 7.6 Redraw the worker?s
What is an isoprofit curve as it relates to wages and fringe benefits? What is a normal-profit isoprofit curve? In what respect is a normal-profit isoprofit curve a budget constraint as viewed by a
Use graphical analysis to show how an unexpected decline in labor demand may set off a cobweb adjustment cycle in a labor market for highly trained professionals. In explaining your graph,
Assume a firm(a) Is a monopsonist in hiring labor(b) Is selling its product as a monopolist. Portray this market graphically. Correctly label all relevant curves, show the equilibrium wage rate and
Assume a surplus of doctors exists. Use labor market supply and demand graphics to depict this outcome. How would the market remedy this situation in the short run and the long run? QB VMP Bx VMP,

Showing 1 - 100 of 210