Questions from Labor Economics

Q: Economists and psychologists have long wondered how worker effort relates to wages

Economists and psychologists have long wondered how worker effort relates to wages. Specifically, the question is whether worker effort responds to increased wages alone or whether effort also respond...

Q: Some compensation schemes include a signing bonus while others include the potential

Some compensation schemes include a signing bonus while others include the potential to receive annual year-end bonuses. a. From the firm’s perspective, what are the benefits of offering a signing bon...

Q: Taxicab companies in the United States typically own a large number of

Taxicab companies in the United States typically own a large number of cabs and licenses; taxicab drivers then pay a daily fee to the owner to lease a cab for the day. In return, the drivers keep all...

Q: A firm hires two workers to assemble bicycles. The firm values

A firm hires two workers to assemble bicycles. The firm values each assembly at $12. Charlie’s marginal cost of allocating effort to the production process is MC = 4N, where N is the number of bicycle...

Q: All workers start working for a particular firm when they are 20

All workers start working for a particular firm when they are 20 years old. The value of each worker’s marginal product is $18 per hour. In order to prevent shirking on the job, a delayed-compensation...

Q: Suppose a firm’s technology requires it to hire 100 workers regardless of

Suppose a firm’s technology requires it to hire 100 workers regardless of the wage level or market demand conditions. The firm, however, has found that worker productivity is greatly affected by its w...

Q: Consider three firms identical in all aspects except their monitoring efficiency,

Consider three firms identical in all aspects except their monitoring efficiency, which cannot be changed. Even though the cost of monitoring is the same across the three firms, shirkers at Firm A are...

Q: Consider three firms identical in all aspects (including the probability with

Consider three firms identical in all aspects (including the probability with which they discover a shirker), except that monitoring costs vary across the firms. Monitoring workers is very expensive a...

Q: a. The analysis of Figure 11-5 does not mention

a. The analysis of Figure 11-5 does not mention the price of output. What is implicitly being assumed about the product market in the analysis? b. Instead of thinking of output as depending on the wag...

Q: Consider a firm that offers the following employee benefit. When a

Consider a firm that offers the following employee benefit. When a worker turns 60 years old, she is given a one-time opportunity to quit her job, and in return the firm will pay her a bonus of 1.5 ti...