EC120 Lecture Notes - Lecture 19: Human Capital, Market Power, Efficiency Wage

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13 Apr 2016

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Earnings and discriminaion: variaions in income are explained by labour supply and labour demand. Labour demand relects the marginal producivity of labour. In equilibrium, the wages workers earn, equal the value of their marginal. Factors that afect producivity and wages contribuion to the economy"s producion: compensaing diferenial: a diference in wages that arises to ofset the non-inancial characterisics of diferent jobs. These characterisics can include: unpleasantness, diiculty, safety: human capital: the accumulaion of investments in people, such as educaion and on- the-job training. Human capital afects producivity, and thus labour and wages: the signalling theory of educaion. An alternaive view on educaion: irms use educaion level to sort between high-ability and low-ability workers. Educaion itself has no impact on producivity or skills. However, the diiculty of earning a college degree demonstrates to prospecive employees that college graduates are highly capable. Policy implicaion: increasing general educaional atainment would not afect wages: ability, efort, and chance.

Related Questions

Question 1:

Economic discrimination puts the economy inside its production possibilities curve because discrimination:

promotes present consumption rather than production of capital goods.

often causes inflation, which reduces the nation's real output.

redistributes income from low-paid to high-paid persons.

arbitrarily blocks women and certain minorities from higher-productivity, higher wage jobs and thus keeps the economy from producing its maximum output.

Question 2:

Economic discrimination:

affects the distribution of domestic output and income, but not its total size.

places the economy at some point inside of its production possibilities curve.

affects the total size of domestic output and income, but not its distribution.

is shown as some point outside of an economy's production possibilities curve.

Question 3:

Labor market discrimination creates a:

larger domestic output but no redistribution.

redistribution of a smaller domestic output.

redistribution of a larger domestic output.

smaller domestic output but no redistribution.

Question 4:

An increase in the collective discrimination coefficients of employers will:

reduce the African-American wage rate, increase African-American employment, and lower the actual African-American-white wage ratio.

reduce the African-American wage rate, decrease African-American employment, and lower the actual African-American-white wage ratio.

increase the African-American wage rate, reduce African-American employment, and increase the actual African-American-white wage ratio.

increase the African-American wage rate, increase African-American employment, and increase the actual African-American-white wage ratio.

Question 5:

A reduction in the collective discrimination coefficients of employers will:

reduce the African-American wage rate, increase African-American employment, and lower the actual African-American-white wage ratio.

reduce the African-American wage rate, decrease African-American employment, and lower the actual African-American-white wage ratio.

increase the African-American wage rate, reduce African-American employment, and increase the actual African-American-white wage ratio.

increase the African-American wage rate, increase African-American employment, and increase the actual African-American-white wage ratio.

Question 6:

In the taste-for-discrimination model:

women and minorities are confined to a limited number of occupations.

white employers behave as if employing African-American workers adds to costs.

individual workers are judged by the characteristics of the groups to which they belong.

prejudiced white employers will never hire African-American workers.

Question 7:

Which of the following employers is the most prejudiced? Employer:

Question 8:

An implication of the taste-for-discrimination model is that:

other things equal, nondiscriminating firms will have lower production costs than discriminating firms.

discrimination will move a firm along its declining average total cost curve.

discrimination can lower a firm's production costs.

other things equal, discriminating firms will have lower production costs than nondiscriminating firms.

Question 9:

An employer is prejudiced, prefers to hire white rather than African-American workers, and is willing to pay higher wages to obtain white workers. This illustrates:

the crowding model.

statistical discrimination.

the taste-for-discrimination model.

reverse discrimination.

Question 10:

Empirical studies generally find that the estimated discrimination coefficient is larger in southern versus northern states. True or False: presuming that the wage differential is due to employer discrimination, this necessarily implies that there are more discriminating employers in the South than there are in the North.

EC120 Lecture Notes - Lecture 19: Human Capital, Market Power, Efficiency Wage

EC120 Full Course Notes

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