There are two groups of workers: H types (higher productivity) and L types (lower productivity) Let...
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There are two groups of workers: H types (higher productivity) and L types (lower productivity) Let CH (e) denote a Type H worker's cost function for obtaining education and let e (e) denote the cost function for a Type L worker. mg is the marginal product of labor for a Type H worker and m, is the marginal product for a Type L worker. By assumption, the marginal products of labor for either type do not depend on the amount of education received. A fraction p are Type H and the other 1-p workers are type L. As usual, the utility that a worker receives from working is the wage minus cost: u(e) = w(e)-c(e) In the following two parts of this problem, you will be given different sets of cost functions, marginal product values, and a value for p. Q2.1 1 Point Cost functions: CL(e) = e Marginal products: 8= Tu my = 5 Share of workers that are type H: p = } What is the maximum value of ē that could be consistent with a pooling equilibrium? Round your answer to ot least three decimal places. Enter your answer here Q2.2 1 Point Cost functions: ez(e) = e CH(e) =e Marginal products: m = 2 mH = 6 Share of workers that are type H: p = What is the maximum value of ē that could be consistent with a pooling equilibrium? Round your answer to ot least three decimal places. Enter your answer here Save Answer There are two groups of workers: H types (higher productivity) and L types (lower productivity) Let CH (e) denote a Type H worker's cost function for obtaining education and let e (e) denote the cost function for a Type L worker. mg is the marginal product of labor for a Type H worker and m, is the marginal product for a Type L worker. By assumption, the marginal products of labor for either type do not depend on the amount of education received. A fraction p are Type H and the other 1-p workers are type L. As usual, the utility that a worker receives from working is the wage minus cost: u(e) = w(e)-c(e) In the following two parts of this problem, you will be given different sets of cost functions, marginal product values, and a value for p. Q2.1 1 Point Cost functions: CL(e) = e Marginal products: 8= Tu my = 5 Share of workers that are type H: p = } What is the maximum value of ē that could be consistent with a pooling equilibrium? Round your answer to ot least three decimal places. Enter your answer here Q2.2 1 Point Cost functions: ez(e) = e CH(e) =e Marginal products: m = 2 mH = 6 Share of workers that are type H: p = What is the maximum value of ē that could be consistent with a pooling equilibrium? Round your answer to ot least three decimal places. Enter your answer here Save Answer
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