Question 1

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

Accepted Answer

A)  Relative college wages have held steady over the last 30 years, with college graduates earning about 60% more than high school graduates during the entire period. 
B)  Relative college wages have held steady over the last 30 years, with college graduates earning about 90% more than high school graduates during the entire period. 
C)  Relative college wages have increased drastically over the last 30 years, from being 50% more than high school wages in 1980 to almost 100% more in 2005. 
D)  Relative college wages have increased drastically over the last 30 years, from being 20% more than high school wages in 1980 to almost 60% more in 2005. 
E)  Relative college wages have decreased slightly over the last 30 years, from being 40% more than high school wages in 1980 to just under 30% more in 2005. 
A)  Relative college wages have held steady over the last 30 years, with college graduates earning about 60% more than high school graduates during the entire period. 
B)  Relative college wages have held steady over the last 30 years, with college graduates earning about 90% more than high school graduates during the entire period. 
C)  Relative college wages have increased drastically over the last 30 years, from being 50% more than high school wages in 1980 to almost 100% more in 2005. 
D)  Relative college wages have increased drastically over the last 30 years, from being 20% more than high school wages in 1980 to almost 60% more in 2005. 
E)  Relative college wages have decreased slightly over the last 30 years, from being 40% more than high school wages in 1980 to just under 30% more in 2005. C

Question 2

In general terms, which of the following statements regarding changes in income inequality in the United States is correct?

Accepted Answer

A)  Inequality has increased substantially over the last 40 years as witnessed by the Gini coefficient increasing from about 0.1 in 1970 to over 0.7 in 2010. 
B)  Inequality has increased slightly over the last 40 years as witnessed by the Gini coefficient increasing from below 0.4 in 1970 to over 0.45 in 2010. 
C)  Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.5 in 1970 to almost 0.05 in 2010. 
D)  Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.8 in 1970 to just over 0.25 in 2010. 
E)  Inequality has stayed about the same over the last 40 years as witnessed by a Gini coefficient that has hovered around 0.6. 
A)  Inequality has increased substantially over the last 40 years as witnessed by the Gini coefficient increasing from about 0.1 in 1970 to over 0.7 in 2010. 
B)  Inequality has increased slightly over the last 40 years as witnessed by the Gini coefficient increasing from below 0.4 in 1970 to over 0.45 in 2010. 
C)  Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.5 in 1970 to almost 0.05 in 2010. 
D)  Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.8 in 1970 to just over 0.25 in 2010. 
E)  Inequality has stayed about the same over the last 40 years as witnessed by a Gini coefficient that has hovered around 0.6. B

Question 3

Which of the following is not a possible explanation as to why wage inequality increased markedly over the last 40 years in the United States?

Accepted Answer

A)  There was an increase in the supply of low-skill workers, particularly through immigration. 
B)  Federal legislation allowed employers to legally engage in more racial discrimination. 
C)  Competition from international economies has increased demand for highly productive workers. 
D)  Recent technological changes have been complementary to skilled labor while substituting for unskilled labor. 
E)  Institutional changes in the United States such as a steady decline in union coverage and a falling real minimum wage have led to changes in the wage distribution. 
A)  There was an increase in the supply of low-skill workers, particularly through immigration. 
B)  Federal legislation allowed employers to legally engage in more racial discrimination. 
C)  Competition from international economies has increased demand for highly productive workers. 
D)  Recent technological changes have been complementary to skilled labor while substituting for unskilled labor. 
E)  Institutional changes in the United States such as a steady decline in union coverage and a falling real minimum wage have led to changes in the wage distribution. B

Question 4

What is the approximate Gini coefficient associated with the following income distribution? $$\begin{array} { c c c } 
\text { Household } & \text { Share of } & \text { Currulative Share } \
\text { Percentile } & \text { Income } & \text { of income } \
20 ^ { \text {th } } & 0.05 & 0.05 \
40 ^ { \text {th } } & 0.10 & 0.15 \
60 ^ { \text {th } } & 0.20 & 0.35 \
80 ^ { \text {th } } & 0.25 & 0.60 \
100 ^ { \text {th } } & 0.40 & 1.00
\end{array}$$

Accepted Answer

A)  0.08 
B)  0.13 
C)  0.23 
D)  0.34 
E)  0.48 
A)  0.08 
B)  0.13 
C)  0.23 
D)  0.34 
E)  0.48

Question 5

Suppose Amy has 100 efficiency units of labor, Bill has 50 efficiency units of labor, and Chris has 20 efficiency units of labor. Which of the following is true?

Accepted Answer

A)  A firm will always hire Amy over Chris, regardless of wages. 
B)  A firm will hire Amy if her wage is at least twice that of Bill's and at least five times that of Chris's. 
C)  A firm will hire Amy if her wage is at most double that of Bill's and at most five times that of Chris's. 
D)  A firm will never hire Bill, regardless of wages. 
E)  A firm will never hire Chris, regardless of wages. 
A)  A firm will always hire Amy over Chris, regardless of wages. 
B)  A firm will hire Amy if her wage is at least twice that of Bill's and at least five times that of Chris's. 
C)  A firm will hire Amy if her wage is at most double that of Bill's and at most five times that of Chris's. 
D)  A firm will never hire Bill, regardless of wages. 
E)  A firm will never hire Chris, regardless of wages.

Question 6

What does the Gini coefficient measure?

Accepted Answer

A)  the rate of growth of income inequality over time 
B)  the degree of inequality in an income distribution 
C)  the correlation coefficient between income and education 
D)  the covariance of income and education 
E)  the degree of tax incidence paid by poor workers 
A)  the rate of growth of income inequality over time 
B)  the degree of inequality in an income distribution 
C)  the correlation coefficient between income and education 
D)  the covariance of income and education 
E)  the degree of tax incidence paid by poor workers

Question 7

An actual Lorenz curve shows

Accepted Answer

A)  the maximum and minimum wage gaps. 
B)  the relationship between income and tax revenue. 
C)  the share of income received by age group. 
D)  the relationship between income and earnings potential. 
E)  the cumulative share of income earned by quintiles of households. 
A)  the maximum and minimum wage gaps. 
B)  the relationship between income and tax revenue. 
C)  the share of income received by age group. 
D)  the relationship between income and earnings potential. 
E)  the cumulative share of income earned by quintiles of households.

Question 8

In the United States, the wealthiest 10 percent of households earns approximately what share of total income?

Accepted Answer

A)  5% 
B)  10% 
C)  30% 
D)  50% 
E)  80% 
A)  5% 
B)  10% 
C)  30% 
D)  50% 
E)  80%

Question 9

What is an example of specific job training?

Accepted Answer

A)  learning word-processing skills 
B)  learning how to use the firm's payroll system 
C)  obtaining a GED 
D)  becoming stronger 
E)  passing the CPA exam 
A)  learning word-processing skills 
B)  learning how to use the firm's payroll system 
C)  obtaining a GED 
D)  becoming stronger 
E)  passing the CPA exam

Question 10

In the United States over the last 30 years, wage differentials have

Accepted Answer

A)  narrowed for all groups of workers. 
B)  increased for all groups of workers. 
C)  increased for skilled workers but have narrowed for unskilled workers. 
D)  decreased for skilled workers but have increased for unskilled workers. 
E)  increased for women but have narrowed for men. 
A)  narrowed for all groups of workers. 
B)  increased for all groups of workers. 
C)  increased for skilled workers but have narrowed for unskilled workers. 
D)  decreased for skilled workers but have increased for unskilled workers. 
E)  increased for women but have narrowed for men.

Question 11

Why is it that a firm will typically not pay for general training?

Accepted Answer

A)  General training is free. 
B)  General training is expensive. 
C)  The benefits of general training depreciate quickly. 
D)  General training does not increase worker productivity. 
E)  The skills gained from the general training are transferable to other firms. 
A)  General training is free. 
B)  General training is expensive. 
C)  The benefits of general training depreciate quickly. 
D)  General training does not increase worker productivity. 
E)  The skills gained from the general training are transferable to other firms.

Question 12

Large disparities in wages could possibly result from all but which one of the following?

Accepted Answer

A)  parental investment in a child's human capital 
B)  increases in the amount of middle-class jobs 
C)  skill-biased technological change 
D)  globalization 
E)  an increase in the demand for highly skilled labor 
A)  parental investment in a child's human capital 
B)  increases in the amount of middle-class jobs 
C)  skill-biased technological change 
D)  globalization 
E)  an increase in the demand for highly skilled labor

Question 13

What does it mean for the U.S. economy to have a positively skewed wage distribution?

Accepted Answer

A)  Most workers earn below the average wage. 
B)  A large proportion of workers earn very high wages. 
C)  The average wage equals the median wage. 
D)  The distribution of wages is symmetric around the mean. 
E)  The mean wage equals the median wage. 
A)  Most workers earn below the average wage. 
B)  A large proportion of workers earn very high wages. 
C)  The average wage equals the median wage. 
D)  The distribution of wages is symmetric around the mean. 
E)  The mean wage equals the median wage.

Question 14

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

Accepted Answer

A)  the return to education is low for all education levels. 
B)  the return to education is constant with respect to age. 
C)  on-the-job training is unrelated to the level of formal schooling. 
D)  less educated workers invest on-the-job training more so than do the highly educated. 
E)  highly educated people also invest more in postschooling human capital compared to the less educated. 
A)  the return to education is low for all education levels. 
B)  the return to education is constant with respect to age. 
C)  on-the-job training is unrelated to the level of formal schooling. 
D)  less educated workers invest on-the-job training more so than do the highly educated. 
E)  highly educated people also invest more in postschooling human capital compared to the less educated.

Question 15

In the United States, the poorest 10 percent of households earns approximately what share of total income?

Accepted Answer

A)  2% 
B)  5% 
C)  10% 
D)  20% 
E)  50% 
A)  2% 
B)  5% 
C)  10% 
D)  20% 
E)  50%

Question 16

What is an example of general job training?

Accepted Answer

A)  learning how to use a forklift 
B)  learning how to weld 
C)  reading a book on techniques for managing large groups of workers involved on team projects 
D)  attending an industry convention on "best practices" 
E)  All of these are examples of general job training. 
A)  learning how to use a forklift 
B)  learning how to weld 
C)  reading a book on techniques for managing large groups of workers involved on team projects 
D)  attending an industry convention on "best practices" 
E)  All of these are examples of general job training.

Question 17

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of ________ while a perfectly equal society will have a Gini coefficient equal to ________.

Accepted Answer

A)  0 ; 1 
B)  1 ; 0 
C)  0 ; infinity 
D)  infinity; 0 
E)  −1; 1 
A)  0 ; 1 
B)  1 ; 0 
C)  0 ; infinity 
D)  infinity; 0 
E)  −1; 1

Question 18

Suppose the distribution of innate ability is distributed symmetrically throughout a population but that the wage distribution is positively skewed. What most likely explains this?

Accepted Answer

A)  a regressive tax code. 
B)  decreased immigration. 
C)  differences in human capital accumulation. 
D)  a decreasing Gini coefficient. 
E)  a noncompetitive labor market 
A)  a regressive tax code. 
B)  decreased immigration. 
C)  differences in human capital accumulation. 
D)  a decreasing Gini coefficient. 
E)  a noncompetitive labor market

Question 19

The Mincer earnings function is used to estimate

Accepted Answer

A)  ability bias. 
B)  the signaling effect. 
C)  the social return to schooling. 
D)  the value of the marginal product of labor. 
E)  the age earnings profile. 
A)  ability bias. 
B)  the signaling effect. 
C)  the social return to schooling. 
D)  the value of the marginal product of labor. 
E)  the age earnings profile.

Question 20

Which of the following statements regarding the relative increase in supply of high-skill labor in the United States since 1960 as measured by education level is not true?

Accepted Answer

A)  The percent of workers without a high school degree has fallen dramatically since 1960. 
B)  The percent of workers with a college degree has increased dramatically since 1960. 
C)  The percent of workers with an advanced degree has increased dramatically since 1960. 
D)  The supply of highly skilled women to the workforce has increased dramatically since 1960. 
E)  All of the above statements are true. 
A)  The percent of workers without a high school degree has fallen dramatically since 1960. 
B)  The percent of workers with a college degree has increased dramatically since 1960. 
C)  The percent of workers with an advanced degree has increased dramatically since 1960. 
D)  The supply of highly skilled women to the workforce has increased dramatically since 1960. 
E)  All of the above statements are true.

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

In general terms, which of the following statements regarding changes in income inequality in the United States is correct?

Which of the following is not a possible explanation as to why wage inequality increased markedly over the last 40 years in the United States?

What is the approximate Gini coefficient associated with the following income distribution? Household Share of Currulative Share Percentile Income of income 2 0.05 0.05 4 0.10 0.15 6 0.20 0.35 8 0.25 0.60 10 0.40 1.00

Suppose Amy has 100 efficiency units of labor, Bill has 50 efficiency units of labor, and Chris has 20 efficiency units of labor. Which of the following is true?

What does the Gini coefficient measure?

An actual Lorenz curve shows

In the United States, the wealthiest 10 percent of households earns approximately what share of total income?

What is an example of specific job training?

In the United States over the last 30 years, wage differentials have

Why is it that a firm will typically not pay for general training?

Large disparities in wages could possibly result from all but which one of the following?

What does it mean for the U.S. economy to have a positively skewed wage distribution?

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

In the United States, the poorest 10 percent of households earns approximately what share of total income?

What is an example of general job training?

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of while a perfectly equal society will have a Gini coefficient equal to .

Suppose the distribution of innate ability is distributed symmetrically throughout a population but that the wage distribution is positively skewed. What most likely explains this?

The Mincer earnings function is used to estimate

Which of the following statements regarding the relative increase in supply of high-skill labor in the United States since 1960 as measured by education level is not true?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 7: The Wage Structure

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

In general terms, which of the following statements regarding changes in income inequality in the United States is correct?

Which of the following is not a possible explanation as to why wage inequality increased markedly over the last 40 years in the United States?

What is the approximate Gini coefficient associated with the following income distribution? Household Share of Currulative Share Percentile Income of income 2 0.05 0.05 4 0.10 0.15 6 0.20 0.35 8 0.25 0.60 10 0.40 1.00

Suppose Amy has 100 efficiency units of labor, Bill has 50 efficiency units of labor, and Chris has 20 efficiency units of labor. Which of the following is true?

What does the Gini coefficient measure?

An actual Lorenz curve shows

In the United States, the wealthiest 10 percent of households earns approximately what share of total income?

What is an example of specific job training?

In the United States over the last 30 years, wage differentials have

Why is it that a firm will typically not pay for general training?

Large disparities in wages could possibly result from all but which one of the following?

What does it mean for the U.S. economy to have a positively skewed wage distribution?

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

In the United States, the poorest 10 percent of households earns approximately what share of total income?

What is an example of general job training?

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of ________ while a perfectly equal society will have a Gini coefficient equal to ________.

Suppose the distribution of innate ability is distributed symmetrically throughout a population but that the wage distribution is positively skewed. What most likely explains this?

The Mincer earnings function is used to estimate

Which of the following statements regarding the relative increase in supply of high-skill labor in the United States since 1960 as measured by education level is not true?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of while a perfectly equal society will have a Gini coefficient equal to .