Study Guides (238,527)
Canada (115,195)
Economics (558)
ECO333H1 (8)

ECO332Midterm Answers (Best Attempt).docx

4 Pages
Unlock Document

University of Toronto St. George
Aloysius Siow

Question 1 a)Achild’s number of years of schooling will depend on the cost for the family. The rate of interest in which the family can borrow at defines the monetary cost of spending on the child relative to the opportunity cost of earning interest on that money. If the interest rate is higher, the higher the cost for education because the opportunity cost is greater as it could be invested at the rate of interest instead and given to the child when they grow up. The cognitive ability of the child is the educational cost for that child. The higher the cognitive ability, the easier and more enjoyable it is for the child to be educated so that the child will have a larger number of years of schooling. If cognitive ability is low, then it is very costly to educate this child since they do not enjoy learning. Therefore, a child’s number of years of schooling will increase as the rate of interest is low, and when the cognitive ability of the child is high. Comments/Suggestions: 7/8 I think you basically covered everything in your explanation and I think it’s good you included opportunity cost of investing in a child’s education (investing money elsewhere and earn interest). But I think you should further explain how a child’s cognitive ability affects the number of years of schooling. Will parents continue to invest in a child’s post secondary education if they have a low cognitive ability? Is it efficient to do so? Question 2 a) I think Mary is correct in that John made an error. Usually, a decline in total fertility rate is attributed to an increased opportunity cost for women to give birth. When women have a greater human capital investment, they will earn more money. This means that it is more costly for the woman to stop work and raise more children. The increase in human capital investment in women is usually attributed to a decrease in the mortality rate for women giving birth. If it is more likely that a woman would die while giving birth, it is less efficient to invest a greater amount of human capital since they may die and the family will not see the results from their investment. This is why, I feel that the decline in total fertility rate would happen after the decline in mortality rate, not before. 1) fertility rate increased because less risky to have kids (mortality rate decrease) 2) human capital investment in girls led to a decrease in the fertility rate Comments/suggestions: 9/12.5 Since you’re trying to prove that John made an error in assuming that a decrease in fertility lead to a decrease in mortality rate, you should probably include information on what actually caused a decrease in the mortality rate (e.g. scientific developments). You talked about what caused a decline in fertility so that part is good. I gave you a 9 because you explained that John had the causal relationship reversed but I felt that further information was needed to back up your argument. So that’s where you lost the 3.5 points. b)Asingle parent that has their child in the 80s would be about 20-30. This means that this was after the baby boom when mortality rates were low, and parents were investing more into human capital for women. This means that these single female parents would be better educated which means their income would be higher than the single female parents before the 1980s. This increase in income would allow the female parents to have more success raising a child themselves because they would not need to depend on the income of a male. There was also a strong push for feminism during the 80s so that there was societal support for women to be happily independent and raise a child themselves. Comments/Suggestions: Some things mentioned in the class notes were that people are choosing to have less children because they’re more time consuming and costly (so you can discuss the demographic transition and why people are having less kids). Since there are more single mothers, these mothers are less likely to have more children since she will be the only caretaker in comparison to mothers who had children prior to the 1980s. You can also talk about the decline in quality of children because if only the mother is taking care of the child and she’s also working then that means less parental time being spent with the child. Question 3 a) The time-savings on home production could lead to families to increase fertility because less time is spent doing housework. This time could be allocated towards spending more time raising children. Child quality is a function of both quantity of goods and time spent with the child. Child quantity may affect this prediction because if parents care about child quality, then they fertility will increase because they have more time to raise more children with the same high quality. If previously, the family could only afford to raise 2 children with high quality, then they might only have 2 children.After the time-savings on home production, families could now raise 3 children with high quality so that fertility would increase. b)An alternative explanation to the baby boom would be the improvement in maternal health. c) The changes in appliance ownership affects the change in time allocated to do housework. Therefore, the author relates that changes in time allocation for housework results in changes in fertility. The problem this address is where does the time saved from doing housework go towards. The author feels that the additional time goes towards increasing fertility. d) The television is a technology for leisure and entertainment. Since there was now additional time for other activities, families could choose to allocate the time saved from housework to entertainment and leisure such as watching television. This would keep fertility levels unchanged because the additional time is not allocated towards having more children or child quality. The TV may also make parents allocate more time towards TV away from other activities. When families invest in a pricey TV, they would want to allocate time to enjoy it. Fathers must still put in the same amount of hours into working, so that they might allocate time away from their child’s quality towards entertainment with the TV. Question 4 a) The author focuses on adopted children because then you can compare how the environment affects the future of the child. The adopted children are compared to their other siblings to show the effect that nurture has on the child’s future. Siblings raised in the same family would have the same environment so it would be difficult to determine to what extent nurture affects a child’s success. The adopted child will have a different nature than the other adopted children in the home so that you can compare how environment affects the success of the child relative to nature by comparing the children. Therefore, by holding environment constant, and having children with differing natures, we can assess the impact of nurture on the success of the child. b) It is assumed that for the two adopted siblings, their covariance in heritability is zero. This is because we assume that they are random adoptions. However, if the parents choose kids who are similar to each other to adopt, then this violates the assumption that they are random adoptions. If the children who they adopt are similar, then the comparison between them is biased because they chose children who are similar such as all having blue eyes. c) I expect the larger group (more causality) to be the first group (children with high genetic endowments) because other studies have shown that good genetics do correlate positively with being smarter. being smarter means it is easier and there is a lower cost for more education so the chances of going to college are higher. argue for either nature or nurture, make sure to use articles and studies to support your belief for more marks!! studies showing H is highly correlated between twins that are separated at birth. studies show that gender is not significant towards how much income you earn. IQ is significant to show how much income you will earn. when you are born as a hockey player is significant to if you become professional. d) College = alpha + Beta0 (Mother’s IQ) + Beta1(Mother’s income) + E We would expect that nature variable (Mother’s IQ) to be positively correlated with mother’s income since if she has a higher cognitive ability then she would attain a higher level of education thus increasing her level of income. The higher the two variables (nature and nurture), the more likely the child is going to attend college. However, there is an issue here because we cannot isolate nature and determine the effe
More Less

Related notes for ECO333H1

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.