8 Education and Training (10) Suppose that Andrea's wage-schooling locus is given by: Years of schooling...
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8 Education and Training (10) Suppose that Andrea's wage-schooling locus is given by: Years of schooling Earnings 6 12,000 7 8 9 10 11 12 13 14 15,360 19,200 22,200 24,420 26,400 27,720 28,680 28,800 (a) Derive the marginal rate of return schedule. When will Andrea quit school if his discount rate is 5 percent? What if it is 15 percent? (b) Suppose now that the government imposes an income tax of 25 percent on both la- bor earnings and interest income. What is the effect of this income tax on Andrea's educational attainment? 8 Education and Training (10) Suppose that Andrea's wage-schooling locus is given by: Years of schooling Earnings 6 12,000 7 8 9 10 11 12 13 14 15,360 19,200 22,200 24,420 26,400 27,720 28,680 28,800 (a) Derive the marginal rate of return schedule. When will Andrea quit school if his discount rate is 5 percent? What if it is 15 percent? (b) Suppose now that the government imposes an income tax of 25 percent on both la- bor earnings and interest income. What is the effect of this income tax on Andrea's educational attainment?
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Answer a MRR is the increase in earnings if Andrea goes to school one more year Year of Schooling 6 ... View the full answer
Related Book For
Business Statistics
ISBN: 9780133899122
3rd Canadian Edition
Authors: Norean D. Sharpe, Richard D. De Veaux, Paul F. Velleman, David Wright
Posted Date:
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