Exam 16: The Market for Labor

A worker will not supply any labor when the wage rate is less than the marginal value of leisure.

If most employers discriminate on the basis of race,then wage differentials between whites and blacks will certainly occur.

For which type of job would you expect to see a compensating differential?

Mary is a waitress who,when tips are included,earns $15 per hour.Mary chooses to work 40 hours per week.Assume there are no taxes,so Mary earns $600 per week.A slowdown in the restaurant's business cuts Mary's hourly wage in half,to $7.50 per hour.To compensate Mary for the lost income,Mary's rich parents begin sending a gift of $300 per week.

An increase in a worker's marginal productivity can cause an increase in the worker's non-labor income.

Under what circumstances will an individual's labor supply curve become backward bending? Explain.

One theory that predicts sustained wage and rent differentials is based on the idea that your accumulation of human capital raises the productivity of the other workers and the physical capital in your locale.In this situation,human capital accumulation creates

Which of the following situations will shift a worker's labor supply curve to the left?

Consider a technological improvement that raises labor's marginal product.Explain why the subsequent effect on the labor market is different when the improvement is temporary as compared to when it is permanent.

Education is partly investment but also partly consumption.

The substitution and income effects of a wage increase both cause consumption to rise.

The difference between the earnings of a college graduate and an unskilled worker constitute the rent on human capital.

One deficiency of labor-leisure indifference curve analysis is that because indifference curves are always tangent to the worker's budget line,the model can not explain why some people choose not to work.

All other things being equal,firms that provide on-the-job training to workers will tend to pay higher wages.

All other things being equal,wages will be higher when

The decline in the average number of hours worked over the last century from 60 hours to 40 hours can be explained as a consequence of

If providing more labor and consuming less leisure would make a worker better off,then the wage rate must be greater than the worker's

When there is an increase in the wage rate there will be

Since mowing ones lawn is not done at their workplace,it is viewed as a use of their leisure time and thus (somewhat paradoxically)falls into the category of leisure.

When a payroll tax is imposed,labor is the only source of income that is taxed.When an income tax is imposed,all sources of income are taxed.