Question 1

If the U.S.system of unemployment insurance didn't exist, one would predict that

Accepted Answer

A) workers would never become unemployed. 
B) workers who became unemployed would remain unemployed for longer durations. 
C) no worker would accept a job that is associated with seasonal unemployment. 
D) seasonal unemployment would cease to exist. 
E) workers in jobs that have high risks of unemployment or in jobs that face seasonal cycles of unemployment would be paid higher wages. 
A) workers would never become unemployed. 
B) workers who became unemployed would remain unemployed for longer durations. 
C) no worker would accept a job that is associated with seasonal unemployment. 
D) seasonal unemployment would cease to exist. 
E) workers in jobs that have high risks of unemployment or in jobs that face seasonal cycles of unemployment would be paid higher wages. E

Question 2

In the standard theory of compensating differentials, a worker's reservation price is

Accepted Answer

A) the amount of money it takes to entice the worker into accepting a risky job. 
B) the amount of money it costs a worker to take a risky job. 
C) the amount of money a worker loses for not taking any job. 
D) the amount of money it costs a worker to take a safe job. 
E) the difference between the wage paid in firms offering risky jobs and the wage paid by firms offering safe jobs. 
A) the amount of money it takes to entice the worker into accepting a risky job. 
B) the amount of money it costs a worker to take a risky job. 
C) the amount of money a worker loses for not taking any job. 
D) the amount of money it costs a worker to take a safe job. 
E) the difference between the wage paid in firms offering risky jobs and the wage paid by firms offering safe jobs. A

Question 3

Which of the following is not a property of isoprofit curves graphed in Probability of Injury (x-axis) versus Wage (y-axis) space?

Accepted Answer

A) All points on each isoprofit curve yield the same level of profit. 
B) Profit-maximizing firms are indifferent as to where they operate on any given curve. 
C) Isoprofit curves going out along the x-axis yield higher profits. 
D) Isoprofit curves going up along the y-axis yield higher profits. 
E) Isoprofit lines are upward sloping. 
A) All points on each isoprofit curve yield the same level of profit. 
B) Profit-maximizing firms are indifferent as to where they operate on any given curve. 
C) Isoprofit curves going out along the x-axis yield higher profits. 
D) Isoprofit curves going up along the y-axis yield higher profits. 
E) Isoprofit lines are upward sloping. D

Question 4

The cost of offering safe versus risky jobs in the highway construction industry vary across firms.In the end, we would expect the market equilibrium to

Accepted Answer

A) randomly match workers to jobs. 
B) match workers who dislike risk to the highest paying jobs. 
C) match workers who dislike risk to firms that find it cheapest to offer safe jobs. 
D) have firms that face a high cost of offering safe jobs to pay the lowest wages. 
E) have firms randomly choose their level of safety. 
A) randomly match workers to jobs. 
B) match workers who dislike risk to the highest paying jobs. 
C) match workers who dislike risk to firms that find it cheapest to offer safe jobs. 
D) have firms that face a high cost of offering safe jobs to pay the lowest wages. 
E) have firms randomly choose their level of safety.

Question 5

Workers with high earnings potential are likely to earn more and to have better working conditions than workers with low-earnings potential.This positive correlation between earnings and working conditions:

Accepted Answer

A) makes it easy to find evidence that workers trade off some earnings in exchange for better working conditions. 
B) makes it difficult to find evidence of compensating wage differentials associated with working conditions. 
C) suggests low-skill and high-skill workers have similar working conditions. 
D) suggests high-skill workers are typically overpaid. 
E) suggests low-skill workers are more efficient per dollar paid in wages plus fringe benefits than are high-skill workers. 
A) makes it easy to find evidence that workers trade off some earnings in exchange for better working conditions. 
B) makes it difficult to find evidence of compensating wage differentials associated with working conditions. 
C) suggests low-skill and high-skill workers have similar working conditions. 
D) suggests high-skill workers are typically overpaid. 
E) suggests low-skill workers are more efficient per dollar paid in wages plus fringe benefits than are high-skill workers.

Question 6

The value of life is calculated by comparing

Accepted Answer

A) wages to risk levels. 
B) risk levels to the number of children in a worker's household. 
C) wages to the number of children in a worker's household. 
D) average life expectancy by occupation to average risk levels by industry. 
E) average wages to the average retirement age. 
A) wages to risk levels. 
B) risk levels to the number of children in a worker's household. 
C) wages to the number of children in a worker's household. 
D) average life expectancy by occupation to average risk levels by industry. 
E) average wages to the average retirement age.

Question 7

The wage differential between a safe and risky job is $5,000.Which of the following is not true?

Accepted Answer

A) The marginal worker is indifferent between working the safe or risky job. 
B) All but the marginal worker in safe jobs require a wage differential above $5,000 to accept a risky job. 
C) All but the marginal worker in the risky job require a wage differential below $5,000 to be indifferent between safe and risky jobs. 
D) The per-worker cost for any firm to change technologies to offer safe jobs in place of risky jobs is $5,000. 
E) The average per worker cost of offering safe jobs exceeds $5,000 at the risky firms. 
A) The marginal worker is indifferent between working the safe or risky job. 
B) All but the marginal worker in safe jobs require a wage differential above $5,000 to accept a risky job. 
C) All but the marginal worker in the risky job require a wage differential below $5,000 to be indifferent between safe and risky jobs. 
D) The per-worker cost for any firm to change technologies to offer safe jobs in place of risky jobs is $5,000. 
E) The average per worker cost of offering safe jobs exceeds $5,000 at the risky firms.

Question 8

In order to get rid of ability bias when estimating the compensating differential associated with various jobs, one should look at

Accepted Answer

A) wages for particular workers who never change jobs over time. 
B) wages for particular workers who change jobs over time. 
C) wages for particular industries over time. 
D) wages for particular industries over various jobs within the industry. 
E) the average wages paid by different firms within the same industry. 
A) wages for particular workers who never change jobs over time. 
B) wages for particular workers who change jobs over time. 
C) wages for particular industries over time. 
D) wages for particular industries over various jobs within the industry. 
E) the average wages paid by different firms within the same industry.

Question 9

Suppose there are two types of jobs-safe and risky.Safe jobs currently pay $10 per hour.Risky jobs currently pay $20 per hour.The government intervenes in the market, mandating that all firms offer safe jobs and pay a wage of $10 per hour.Which of the following is true?

Accepted Answer

A) Workers who originally worked safe jobs are helped by the policy. 
B) Firms that originally offered safe jobs are hurt by the policy. 
C) Workers who originally worked risky jobs are helped by the policy. 
D) Firms that originally offered risky jobs are hurt by the policy. 
E) No one is hurt by the new policy. 
A) Workers who originally worked safe jobs are helped by the policy. 
B) Firms that originally offered safe jobs are hurt by the policy. 
C) Workers who originally worked risky jobs are helped by the policy. 
D) Firms that originally offered risky jobs are hurt by the policy. 
E) No one is hurt by the new policy.

Question 10

The supply curve of labor to risky jobs reveals.

Accepted Answer

A) how many workers are willing to offer their labor to the risky job as a function of the wage differential between the risky job and the safe job. 
B) how many workers are willing to offer their labor to the risky job as a function of the wage paid to workers of the risky job. 
C) how many workers are willing to offer their labor to the safe job as a function of the wage paid to workers of the risky job. 
D) the number of workers who dislike risky jobs. 
E) the fraction of workers who dislike risky jobs. 
A) how many workers are willing to offer their labor to the risky job as a function of the wage differential between the risky job and the safe job. 
B) how many workers are willing to offer their labor to the risky job as a function of the wage paid to workers of the risky job. 
C) how many workers are willing to offer their labor to the safe job as a function of the wage paid to workers of the risky job. 
D) the number of workers who dislike risky jobs. 
E) the fraction of workers who dislike risky jobs.

Question 11

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.

Accepted Answer

A) Abby and Rudy both work a safe job. 
B) Abby works a safe job while Rudy works a risky job. 
C) Abby works a risky job while Rudy works a safe job. 
D) Abby and Rudy both work risky jobs. 
E) Rudy works a risky job while Abby doesn't care which type of job she works. 
A) Abby and Rudy both work a safe job. 
B) Abby works a safe job while Rudy works a risky job. 
C) Abby works a risky job while Rudy works a safe job. 
D) Abby and Rudy both work risky jobs. 
E) Rudy works a risky job while Abby doesn't care which type of job she works.

Question 12

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

Accepted Answer

A) the value of risk. 
B) the value of safety. 
C) the value of life. 
D) the value of injury. 
E) the value of work. 
A) the value of risk. 
B) the value of safety. 
C) the value of life. 
D) the value of injury. 
E) the value of work.

Question 13

Assume that the market clearing wages are $10 per hour in a safe job and $18 per hour in a risky job.Then, at the completion of a war, many ex-soldiers who enjoy risky ventures enter the labor market.Which of the following is not a likely outcome of this change?

Accepted Answer

A) Many firms that currently offer risky jobs will begin offering safe jobs. 
B) The fraction of people working safe jobs will decrease. 
C) The wage associated with risky jobs will decrease. 
D) The number of people working risky jobs will increase. 
E) The wage differential will decrease. 
A) Many firms that currently offer risky jobs will begin offering safe jobs. 
B) The fraction of people working safe jobs will decrease. 
C) The wage associated with risky jobs will decrease. 
D) The number of people working risky jobs will increase. 
E) The wage differential will decrease.

Question 14

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

Accepted Answer

A) the worker cannot receive a higher wage at any other firm. 
B) the worker-firm match is efficient in the sense that neither the worker nor the firm could become better off with a different match. 
C) the firm could increase its profits by offering a safer job as doing so would allow the firm to lower the wage it pays. 
D) the hedonic wage function must be very steeply sloped to ensure that the worker doesn't accept a better paying job. 
E) the worker receives no surplus from the match. 
A) the worker cannot receive a higher wage at any other firm. 
B) the worker-firm match is efficient in the sense that neither the worker nor the firm could become better off with a different match. 
C) the firm could increase its profits by offering a safer job as doing so would allow the firm to lower the wage it pays. 
D) the hedonic wage function must be very steeply sloped to ensure that the worker doesn't accept a better paying job. 
E) the worker receives no surplus from the match.

Question 15

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

Accepted Answer

A) many workers are willing to work the risky job for free. 
B) most workers prefer the risky job to the safe job when both wages are equal. 
C) the number of risky jobs is less than the number of workers who prefer the risky job. 
D) there is great demand for labor in both sectors. 
E) the government mandates that the wages in the two sectors be equal. 
A) many workers are willing to work the risky job for free. 
B) most workers prefer the risky job to the safe job when both wages are equal. 
C) the number of risky jobs is less than the number of workers who prefer the risky job. 
D) there is great demand for labor in both sectors. 
E) the government mandates that the wages in the two sectors be equal.

Question 16

Risk-averse workers

Accepted Answer

A) have shallow wage-risk indifference curves when risk is graphed on the x-axis. 
B) are willing to work in riskier environments for a relatively low increase in the wage. 
C) are willing to accept large wage decreases in exchange for a safer work environment. 
D) never work in risky environments. 
E) are more productive than risk-loving workers. 
A) have shallow wage-risk indifference curves when risk is graphed on the x-axis. 
B) are willing to work in riskier environments for a relatively low increase in the wage. 
C) are willing to accept large wage decreases in exchange for a safer work environment. 
D) never work in risky environments. 
E) are more productive than risk-loving workers.

Question 17

A hedonic wage function could be applied to which of the following job characteristics?

Accepted Answer

A) The probability of being injured on the job. 
B) The degree to which a job involves monotonous work. 
C) The degree to which the area surrounding the job location is safe. 
D) The degree to which a job involves strenuous work. 
E) All of the above can be represented with a hedonic wage function. 
A) The probability of being injured on the job. 
B) The degree to which a job involves monotonous work. 
C) The degree to which the area surrounding the job location is safe. 
D) The degree to which a job involves strenuous work. 
E) All of the above can be represented with a hedonic wage function.

Question 18

Suppose 1 in 80 workers die on the job each year in Copper's Coal Mine, while 1 in 75 workers die on the job each year in Silver Creek Coal Mine.Moreover, the average salary is $70,000 at Copper's Coal Mile and is $72,000 at Silver Creek Coal Mine.Given this information, what is the implied statistical value of a life of a miner?

Accepted Answer

A) $2,000 
B) $70,000 
C) $480,000 
D) $1,200,000 
E) $2,400,000 
A) $2,000 
B) $70,000 
C) $480,000 
D) $1,200,000 
E) $2,400,000

Question 19

A standard hedonic wage function might show what relationship?

Accepted Answer

A) The relationship between the wage and a worker's age. 
B) The relationship between the wage and a worker's race. 
C) The relationship between the wage and a worker's gender. 
D) The relationship between the wage and the probability of injury faced by the worker. 
E) The relationship between the wage and a worker's skill level. 
A) The relationship between the wage and a worker's age. 
B) The relationship between the wage and a worker's race. 
C) The relationship between the wage and a worker's gender. 
D) The relationship between the wage and the probability of injury faced by the worker. 
E) The relationship between the wage and a worker's skill level.

Question 20

Assuming that workers are fully aware of their working conditions, which of the following will not happen when the government mandates pollution control to protect workers' health?

Accepted Answer

A) Worker utility will increase. 
B) Employment will decrease. 
C) The air in workplaces will become cleaner. 
D) Firms with low-profits before the mandate may shut down or exit the industry. 
E) Wages will fall at all but the cleanest firms. 
A) Worker utility will increase. 
B) Employment will decrease. 
C) The air in workplaces will become cleaner. 
D) Firms with low-profits before the mandate may shut down or exit the industry. 
E) Wages will fall at all but the cleanest firms.

If the U.S.system of unemployment insurance didn't exist, one would predict that

In the standard theory of compensating differentials, a worker's reservation price is

Which of the following is not a property of isoprofit curves graphed in Probability of Injury (x-axis) versus Wage (y-axis) space?

The cost of offering safe versus risky jobs in the highway construction industry vary across firms.In the end, we would expect the market equilibrium to

Workers with high earnings potential are likely to earn more and to have better working conditions than workers with low-earnings potential.This positive correlation between earnings and working conditions:

The value of life is calculated by comparing

The wage differential between a safe and risky job is $5,000.Which of the following is not true?

In order to get rid of ability bias when estimating the compensating differential associated with various jobs, one should look at

Suppose there are two types of jobs-safe and risky.Safe jobs currently pay $10 per hour.Risky jobs currently pay $20 per hour.The government intervenes in the market, mandating that all firms offer safe jobs and pay a wage of $10 per hour.Which of the following is true?

The supply curve of labor to risky jobs reveals.

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

Assume that the market clearing wages are $10 per hour in a safe job and $18 per hour in a risky job.Then, at the completion of a war, many ex-soldiers who enjoy risky ventures enter the labor market.Which of the following is not a likely outcome of this change?

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

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

Risk-averse workers

A hedonic wage function could be applied to which of the following job characteristics?

A standard hedonic wage function might show what relationship?

Assuming that workers are fully aware of their working conditions, which of the following will not happen when the government mandates pollution control to protect workers' health?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 5: Compensating Wage Differentials

If the U.S.system of unemployment insurance didn't exist, one would predict that

In the standard theory of compensating differentials, a worker's reservation price is

Which of the following is not a property of isoprofit curves graphed in Probability of Injury (x-axis) versus Wage (y-axis) space?

The cost of offering safe versus risky jobs in the highway construction industry vary across firms.In the end, we would expect the market equilibrium to

Workers with high earnings potential are likely to earn more and to have better working conditions than workers with low-earnings potential.This positive correlation between earnings and working conditions:

The value of life is calculated by comparing

The wage differential between a safe and risky job is $5,000.Which of the following is not true?

In order to get rid of ability bias when estimating the compensating differential associated with various jobs, one should look at

Suppose there are two types of jobs-safe and risky.Safe jobs currently pay $10 per hour.Risky jobs currently pay $20 per hour.The government intervenes in the market, mandating that all firms offer safe jobs and pay a wage of $10 per hour.Which of the following is true?

The supply curve of labor to risky jobs reveals.

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

Assume that the market clearing wages are $10 per hour in a safe job and $18 per hour in a risky job.Then, at the completion of a war, many ex-soldiers who enjoy risky ventures enter the labor market.Which of the following is not a likely outcome of this change?

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

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

Risk-averse workers

A hedonic wage function could be applied to which of the following job characteristics?

A standard hedonic wage function might show what relationship?

Assuming that workers are fully aware of their working conditions, which of the following will not happen when the government mandates pollution control to protect workers' health?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters