Suppose workers can be divided into two groups: high and low skill workers. Let y be th number of years of college education of a worker. For workers in Group A (high skill workers) the cost of attaining an educational level y is CA(Y)=$25y; for workers in Group B (low skill workers) the cost of attaining an educatio level y is CB(y)=$65y. Employees will be offered $350 if they have y ≥ y*, where y* is an educational threshold determined by the employer. They will be offered $50 if they have y < y*. To reduce the cost of education, the government offers a subsidy to the workers. The government will give to each worker $5 for each year of education. In equilibrium, education can be used as a signal of the worker's true type if
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- QUESTION 16 Suppose workers can be divided into two groups: high and low skill workers. Let y be the number of years of college education of a worker. For workers in Group A (high skill workers) the cost of attaining an educational level y is CÃ(y)=$25y; for workers in Group B (low skill workers) the cost of attaining an educational level y is CB(y)=$65y. Employees will be offered $410 if they have y ≥ y*, where y* is an educational threshold determined by the employer. They will be offered $50 if they have y y* zImagine that the wage-schooling locus is given by w(s)=s^(1/3). What will be the optimal level of education for an individual to take if next period’s earnings in any given time are worth 95% of current earnings for that individual? Answer is s=20/57 I need step by step calculationsFor Group A the cost of attaining an educational level y is CA(y) = $6,000y and for Group B the cost of attaining that level is CB(y) = $10,000y. Employees will be offered $50,000 if they have where y* is an education threshold determined by the employer. They will be offered $130,000 if they have An employer who only wants to hire individuals who find learning less costly can do so by choosing y* to be anywhere between:
- Q-3 Are the following statement true of false ? You need to provide an aurgument for and against it why it is so.In order to make a hiring decision, a manger must: Compare wage rate with MPL. If Wage rate is equal to MPL then hire Compare wage rate with MPL. If wage rate is less than MPL then hire. Compare wage rate with MPL. If wage rate is greater than MPL then hire. Compare wage rate with MRP. If wage rate is equal to MRP then hire Compare wage rate with MRP. If wage rate is lower than MRP then hire.Suppose there are two types of workers. Type 1 workers have a marginal product of labor (MPL) = 1. That is, if a firm hires an extra Type I worker, that worker will produce 1 extra unit of output. Type II workers have a MPL = 2. The firm can sell each extra unit of output for P = $12,000. Firms are unable to identify whether or not a worker is Type I or Type Il unless the worker sends a signal of what type they are. The signal that workers can send is a level of education, e. The firm adopts the following hiring strategy: If e >e* then offer the worker a wage rate equal to $24,000. If e < e* then offer the worker a wage rate equal to $12,000. The cost to Type I workers of getting education level e is $4000*e. The cost to Type II workers of getting education level e is $2000*e. If the firm sets e* = 8, which of the following statements is true? O Type I workers will not get e*, but Type II workers will get e*, which means there is a separating equilibrium. O Neither type of workers will…
- Jim Range is the manager at a USPS office which requires arduous physical labor of their employees. Jim wants to hire an employee. During the interview, Sofia Caster tells Jim that she is a hard worker. But Sofia Caster realizes once she is hired that the federal government and its agencies cannot fire their employees unless their performance is extremely poor. She thus decides to work minimally as a result of this information. The problem was created because of? Misaligned incentives. Moral hazard. A OB c Asymmetric information. OD. The principle agent problem.The value of a worker’s marginal product is $40 per hour for high- ability workers and $10 per hour for low-ability workers. The preferences of high-ability workers correspond to the utility function UH(E,W)=W−5E, and the preferences of low-ability workers correspond to the utility function UL(E,W)=W−10E. By law, everyone is required to attend at least five years of school. Two-thirds of the population has low ability, and one-third has high ability. What can you say about the educational attainment of each type of worker in a separating equilibrium, and in a pooling equilibrium? Are workers better off with the most efficient separating equilibrium, or with the most efficient pooling equilibrium? Demonstrate your answer by using appropriate schedules."An employer will not invest in general training for its employees." Agree or disagree with the statement and justify your response.
- Suppose that the wage of skilled labour equals 30 and the wage of unskilled labour equals 20. The total labour force is 35. In addition, the number of unskilled workers who are employed is twice as large as the number of skilled workers who are employed. The markets for skilled labour and unskilled labour are defined as in the lecture notes. a) finding a job in the skilled sector. Calculate the opportunity cost of skill acquisition as a function of the probability of b) bBriefly describe the nature of the trade-off faced by an unskilled worker. "Calculate the number of employed workers in the skilled sector if unskilled workers are c) paid just enough to forego skill acquisition. Show ALL steps. d) of finding a job in the skilled sector is 80 %. riefly explain why neither of the two labour markets is in equilibrium if the probability(Harder) Can you come up with gross profit levels I and II such that for the unobservable effort case the principal will implement e=1 (that is will offer the optimal wage schedule for e=1) if there is no limited liability, but will implement e=0 when there is limited liability. For the values of gross profit levels you calculate, which effort level is socially optimal (which effort level would be implemented when effort is observable). Based on your answer, is it possible to have lower social surplus/welfare because of asymmetric information?Wage W5 W4 W3 W₂ W₁ Q₂ Q3 Q 4 MFC S D = MRP Quantity of Labor Larry's Lumber Mill sells lumber in a perfectly competitive product market. However, Larry's Lumber Mill is the only employer of labor in the small community where it is located. The labor market is depicted by the graph above. (a) Using the labels from the graph above, identify each of the following. (i) The optimal quantity of labor Larry's Lumber Mill will hire (ii) The wage rate Larry's Lumber Mill will pay (b) Using the labels from the graph above, identify the number of workers Larry's Lumber Mill would hire if the labor market were perfectly competitive. (c) Because of growing housing demand, the price of lumber increases. What will happen to each of the following? (i) Larry's Lumber Mill's demand for labor. Explain. (ii) The supply of labor