Exam 5: Compensating Wage Differentials

Abby's reservation price for working in a risky job is $5 per hour while Rudy's reservation price for working in a risky job is $8 per hour. Characterize Abby and Rudy's job selections if safe jobs pay $12 per hour and risky jobs pay $18 per hour.

The equilibrium hedonic wage function is most likely

Estimates of the compensating wage differentials associated with particular job characteristics are valid only if

The correlation between wages and the probability of encountering a fatal injury while on the jobs can be used to calculate the value of

In order for the compensating differential associated with a risky job to be negative (so that a risky job pays less than a nonrisky job), it must be that

Suppose 1 in 200 pilots flying Space-Race aircraft die each year while only 1 in 500 pilots flying Subspace Gliders die each year. Moreover, the average salary of Space-Race pilots is $115,000 while the average salary of Subspace Glider pilots is $109,000. Given this information, what is the implied statistical value of a life of a pilot?

A firm has the choice of offering "dirty" jobs that are likely to cause severe health problems for its workers or of offering "clean" jobs by installing safety equipment at a cost of $5 per hour per employee that will substantially reduce the chances of health problems. The firm will

Empirically, women who are married to a spouse who has access to health insurance earn higher wages and are less likely to be offered employer-sponsored health insurance than are married women whose spouse does not have access to health insurance. This pattern

When a worker and firm are matched on the hedonic wage function, it is implied that

Having the government regulate workplace safety would most likely improve economic efficiency if