Questions from Labor Economics

Q: Consider a firm that faces a constant per unit price of $

Consider a firm that faces a constant per unit price of $1,200 for its output. The firm hires workers, E, from a union at a daily wage of w, to produce output, q, where q = 2 E ½ Given the production...

Q: Consider the same setup as in the previous problem, but now

Consider the same setup as in the previous problem, but now the union is allowed to specify any wage, w, and the firm is then allowed to hire as many workers as it wants (up to 225) at the daily wage...

Q: Suppose the union’s resistance curve is summarized by the following data.

Suppose the union’s resistance curve is summarized by the following data. The union’s initial wage demand is $10 per hour. If a strike occurs, the wage demands change as follows: Length of Strike:………...

Q: At the competitive wage of $20 per hour, firms A

At the competitive wage of $20 per hour, firms A and B both hire 5,000 workers (each working 2,000 hours per year). The elasticity of demand is -2.5 and -0.75 at firms A and B respectively. Workers at...

Q: Several states recently passed laws restricting bargaining rights for public employees.

Several states recently passed laws restricting bargaining rights for public employees. Most notably the changes tended to restrict the union’s right to negotiate over fringe benefits such as health c...

Q: Suppose there are 100 workers in an economy with two firms.

Suppose there are 100 workers in an economy with two firms. All workers are worth $35 per hour to firm A but differ in their productivity at firm B. Worker 1 has a value of marginal product of $1 per...

Q: a. Why would a firm ever choose to offer profit-

a. Why would a firm ever choose to offer profit-sharing to its employees in place of paying piece rates? b. Describe the free-riding problem in a profit-sharing compensation scheme. How might the work...

Q: a. How does the offering of stock options to CEOs attempt

a. How does the offering of stock options to CEOs attempt to align CEO incentives with shareholder incentives? b. Enron was a company that was ruined in part because of the stock options offered to up...

Q: a. Personal injury lawyers typically do not charge a client unless

a. Personal injury lawyers typically do not charge a client unless they obtain a monetary award on their client’s behalf. Why? b. What would happen to the number of lawsuits if lawyers had to charge a...

Q: Many public school teachers pay a fixed percentage of their salary into

Many public school teachers pay a fixed percentage of their salary into a retirement system. Upon retirement, suppose teachers receive a retirement benefit that depends on their years of service and t...