LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 11, Problem 2RQ
To determine
Determine how the workers sort themselves across piece-rate and time-rate jobs.
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In the labour-discipline model (LDM), the employer sets the wage to minimise the cost of effort. Using the LDM, illustrate and explain how a change in conditions affect the employee’s best response function (BRF) in the following scenarios:
In relation to the hospitality sector (e.g. restaurant industry) in the US: a sharp increase in the pool of unemployed people due to a hiring freeze, combined with a rise in unemployment benefits.
How will the following issues shape compensation professionals' work for years to come:
Increased minimum wage rate.
Gender pay gap.
Workforce demographic shifts.
Compensation-productivity gap.
When would you see the greatest gain if there is a compensating differential built into your salary?
The differential is for a negative risk that you care about more than most people do.
The differential is for a large negative risk that you don't care about as much as most people do.
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The differential is for a slightly positive job aspect that you care about more than most people do.
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- In a tradeoff between two decision criteria such as ease of commuting and attractiveness of job, can you use money as a common denominator to estimate precise tradeoffs? State your reasons. Illustrate using the following tradeoff matrix. What sort of salary differences would it take for commute time to trump job attractiveness?Decision Criteria Monetary Issues Other IssuesCommute Time Medium MediumJob Attractiveness High Mediumarrow_forwardShow that the competitive labor market compensates workers for the probability that they will be laid off.arrow_forwardExplain why labor productivity and real hourly compensation track so closely over time.arrow_forward
- Wilson is injured on the job when a forklift tips over and falls on him. His boss knew the forklift was in disrepair and dangerous but allowed the forklift to be used. Can Wilson collect worker’s compensation benefits? Can Wilson sue his employer for negligence?arrow_forwardDiscuss the view that the specificity of the on-the-job training does not matter in the choice of who bears the cost of on-the-job training.arrow_forwardDiscuss how total earnings are determined for both piece-rate and time-rate workersarrow_forward
- Discuss the contributions of economics to employee and management motivation and pay.arrow_forwardCan you help solve parts A through C. For part C please refer to the question posted here "Suppose a negative salary is not feasible. If you give a base salary of 0, what payment would you give in the event of success in order to induce high effort and participation?"arrow_forwardConsider the following model of labour supply. There is a representative worker with the following utility function: U(C,L) = CªL²-a where U is utility, C is consumption, L is leisure, and a is a parameter that governs the importance of consumption to the worker's utility relative to leisure. a must satisfy 0 < a < 1. Consumption and Leisure are always positive (by definition) The budget constraint and time constraint are: C = wh + V h = T – L where w is hourly wage, and V is non-labour income, T is time endowment. Here, w,V and T are parameters. h is hours work a) Does the utility function exhibit the "the more the better" and "law of diminishing marginal utility" assumptions? Show it. b) Characterize the optimal leisure and consumption as functions of the parameters a, w, V and Tarrow_forward
- What are some characteristics of professional behavior in the work pladearrow_forwardYou have two choices in jobs. Job A means you earn $70,000 a year, in an area where the average income is $80,000. Job B means you earn $60,000 a year in an area where the average income is $50,000. Assume all other factors such as housing quality, schooling, etc are the same. A "rational profit maximizer" would: Have an indeterminate choice. Be indifferent between the two wages. Always choose the lower wage. Always choose the higher wage.arrow_forwardDiscuss how economic forces influence decisions about pay. Do U.S. companies pay their chief executive officers too much? Why or why not? What steps should be taken to ensure pay equity? Lastly, rather than focusing on past performance in a yearly review, should employee performance evaluation systems incorporate continuous feedback?arrow_forward
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