Assume you are working for the ministery of Youth and you are willing to model behaviour of young people looking for a summer jobs. Set 3 different jobs your agent can choose. Make first one of them a high wage job, paying between 10000 to 100000$. Second job payse between 3000 to 5000 dollar, and third job pays between 500 and 2500 dollars. Set possibilities for Hakan to get offer from each job. Leave a 20% to 50% possibility for the agent getting no offer. Make sure possiblity of getting first job offer is between 0% and 5% but never exactly zero. Assume job search costs are negligible. Assume Our agent is risk-neutral, and his discount rate ( interest rate) is zero.

a) Calculate the minimum wage level a job should offer to make our agent accept the job, before he goes to Japan, rather than continue the job search process during his first month in Japan.

b) Turkish government is planning to give some monetary support to young people, while they are looking for jobs. Set a payment to unemployed people between 200 dollar to 800 dolar. How will this development change the minimum wage a job should offer to make our agent accept a job?

Answer rating: 100% (QA)

a Let First Job 50000 Between 10000 and 100000 Second Job 4000 Between 3000 and 5000 Third Job 1000 ... View the full answer