Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 12: Problem 8

Each of the following observations, ceteris paribus, implies something about a particular labor market. For each one, (1) identify the relevant labor market; (2) state whether you expect the wage rate in that market to be higher than otherwise, or lower than otherwise; and (3) identify which conceptual explanation for wage differences (among those discussed in the chapter) you are applying to reach your conclusion. a. Elevator repairers have a higher accident rate than most other jobs. b. People who work in New York City have to pay higher rent than other people. c. People like to work in New York City because there is a lot to do there. d. It takes rare diligence, motivation, and practice to become a concert pianist. e. Los Angeles has passed legislation requiring that fortune tellers become certified by the city. f. Office cleaning services don't like to risk hiring ex convicts, because employers believe they are more likely to steal equipment than other employees.

Short Answer

Expert verified
a. Elevator repairers earn higher wages due to occupational hazards. b. Wages in NYC are higher due to increased living costs. c. Wages might be lower in NYC due to more people wanting to work there. d. Concert pianists earn higher wages due to the requirement of rare skills. e. Fortune tellers in L.A. earn higher wages due to legislative certification requirements. f. Ex-convicts might earn lower wages in cleaning services due to hiring discrimination.

Step by step solution

01

Observation a

1. Relevant labor market is Elevator repair. 2. A higher accident rate increases the occupational hazard, thus the wage rate should be higher to compensate for this. 3. This is related to compensating wage differentials.
02

Observation b

1. Relevant labor market is general labor market in New York City. 2. Higher living cost or rent necessitates higher wages, hence we expect the wage rate to be higher. 3. This also falls under compensating wage differentials.
03

Observation c

1. Relevant labor market is the general labor market in New York City. 2. If people find it attractive to work in NYC, the wage rate might be lower because of increased labor supply. 3. Here we are applying the principle of supply and demand.
04

Observation d

1. Relevant labor market is Concert Pianists. 2. If it requires rare diligence, motivation, and practice, suggests scarcity of such talent, hence we should expect their wage rate to be higher. 3. This falls under the principle of human capital investment.
05

Observation e

1. Relevant labor market is fortune tellers in Los Angeles. 2. Legislation requiring certification adds an additional barrier for entry, hence we should expect higher wages due to decreased supply. 3. This falls under the theory of labor markets and institutions such as legislative requirements.
06

Observation f

1. Relevant labor market is office cleaning services. 2. If hiring risks are perceived to be higher for ex-convicts, their wage rate might be lower due to this resulting discrimination. 3. This falls under the discrimination in labor markets.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Many people think that immigration into the United States, because it causes competition for jobs, will lower the wage rates of U.S. workers. Yet, even though the United States admits hundreds of thousands of immigrants each year, the average U.S. wage has continued to grow. Can you explain why? Are there any groups of workers within the economy for whom the fear of lower wages is justified? Explain.

How would each of the following, ceteris paribus, affect the college wage premium over a long period of time? a. Government scholarships are sharply curtailed. b. Weird solar radiation renders all computers in the world inoperable. c. Computers become even more complicated to operate.

In the nation of Barronia, the market for construction workers is perfectly competitive. Explain what would happen to the equilibrium wage rate and equilibrium employment of construction workers under each of the following circumstances: a. Young adults in Barronia begin to develop a taste for living in their own homes and apartments, instead of living with their parents until marriage. b. Construction firms begin to use newly developed robots that perform many tasks formerly done by construction workers. c. Because of a war in neighboring Erronia, Erronian construction workers flee across the border to Barronia. d. There is an increased demand for automobiles in Barronia, and Barronian construction workers have the skills necessary to produce automobiles. e. Tuition at trade schools that qualify Barronians for construction work become cheaper.

Some advocates of the minimum wage argue that any decrease in the employment of the unskilled will be slight. They assert that an increase in the minimum wage will actually increase the total amount paid to unskilled workers (i.e., wage \(\times\) number of unskilled workers employed). Discuss what assumptions they are making about the wage elasticity of labor demand.

Suppose that in the market for U.S. meat packers, two things happen simultancously: (1) Due to growth in less-developed countries, the demand for U.S. meat exports rises; and (2) Due to other job opportunities, fewer people find meat-packing an attractive job. a. Which curve or curves in the labor market for meat packers would be affected by these changes? b. If there were no other changes, could you predict the impact of these events on the equilibrium wage of meatpackers? On their equilibrium employment level? Explain.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free