(::-~
.;21
4
)
~
~
(
Qu
r
j::"(,.,~
;'/"
I. a. There are three basic types of unemployment.
describe each one.
.I
d",'f(
C Ii,),(-{
C.yc
I;.,
J~
Ov('
/lc~/~:J/'.
h
List them and in a sentence or two
M1"
IJ~;'17
t(/
J,
J1
J'J
{"'y
fv
/-e~d
C/f?
c/ ~ h -c I ~ ,.,1-
146(/\.0
clt'~~~
&1
r h-",c
h,
J '.;6
-..
I~
1chcJ",lit/
&1Ij
./
/
'.
vn'lO
~1,ji~
~),
I
" -1'
/1? 1J ;"7J.~ M
.~
..AJ I J",*, ~J.C 4
-
01 i/t
s e 4 /"r;
7A't'
J"
//
ft, i "11.r
..(
/
-e(/~ /-1"' c, -'7e1"
",y--
'r~.r
./
..9 tI'" 5
6"1
;"'::1...S
y
q
W/~
c,
hA~/.-'1.S
fu
h"1IA
11 i:J I.
,,)~
I;
Ct
/2.
b. In the graph to the right, please draw a Beveridge Curve.
Make sure the curve goes through pt. X. Label the axes, but
you do not need to number them.
t/lfC",,(I(,
IlL
c. Supposewe move along the Beveridge Curve to the right.
Which if any of the three types of unemployment would
be affected? Would they increase or decrease?
V;1
e """' Illy
d. Supposethe government were to use fiscal policy to reduce unemployment. Which
type of unemployment might this reduce? C\
l'
~t"
v1..1'
{
c:1
~
1,-11
I
(
.,..
e
J-
MH'J
,.~,Jr~
~..,J.
~
J"v'v.)
e. Show what impact the fiscal policy would have on the Beveridge Curve. Label it as
<. Fisc. Pol.
I
.1
I /
I
Jv
4 v4f,'k
f1,
2. For each of the situations describedbelow, explain whether the action is legal or
illegal, the relevant law or court decision that makes the action legal or illegal and
why the action is legal or illegal.
a.
The manager at Home Depot refuses to hire women becausehe believes that
customers prefer to buy hardware from men.
FI1~,
1/ Lf
7~
Ctf~\,1-
qJ
If (
1-
"
/ (; ,-
,"'
1'7"' A V"le.1
t
k.J-
c);?
c;;..;b"
M
6e;J,J
/'t1C'f
a J
I.-'\/ f 17
q.f
o'..IS I "1
4;
ydt/
q+
1
/"f
/
15/
#'1?
--ell
The manager at Home Depot refuses to hire homosexuals because he believes that
customers prefer to buy hardware from heterosexuals.
ft~
Le5e; /.
.tJrc'./~ 11{'
/
c
/l,sllh
dJt'.../~I-14J,.
~
b
C,vi'j
Ily )
M ~d- /J-1 'ill I" I
IZ 15~.J-J AcJ-
U -4'r-f
IJ
/111
6 (..,..,L-
Mi{
h
c IJ v" ,
/}I)+
~,(
~
/{'f~/)
4,1""/
(:-,'
)/l"
(I -"
.rt"v"",
The Teamsters (the truck drivers' union) go on strike for higher wages and refuse
to deliver gasoline. President Bush orders the Teamstersto return to work as it
his belief that the strike is endangeringthe nation' s health. (Discuss President
Bush's action.)
I/'fj',"..
c;"tA
(~~
~
fl"1JClr,l.p/,
GJnly
(:;
7~
L~C1I.
.f,t -)I
df'c/c.,...~
~
t..v'"1/1't",.rJ
cltJ
MIJ
~ ,..:1-~ I
J-v
I~I
Ac
#qh.,...",1
/f),...y~
"L
./-
511./"' .I
E/H'
'."",I"!
h
IJ
Vvilr~
.:hle
7)
f h-J
Ireo
,
~'I"
I..e.
e;,dc,;..J-I",",'",s
;..;<-1
d,
')...1
/ I:
/)t1.1",..J
Ijt',,)h
~hA
]I,h)lj
As you may have heard, the National Hockey League (NHL) season was
cancelled. (Probably was the last chance for my rapidly aging Detroit Red Wings
to win another Stanley Cup!) Suppose Mike Illitch, the owner of the team bribes
Steve Yzerman, one of the team's players and Illitch's employee, to go to the
NHL union meetings and report back to Illitch what the players will settle for.
(Discuss l1litch' s bribe. )
J.fi .1'"
' / , -.-,
,7,{'f'
(~/\/
w 4?n.pr Af
L.G; 6l/ /
IIf/~-h
'1
;/1-1 ?1 tr 'I'J
,L
I
;111"5
~r
t?l11
1'1'1~,/)rl'1!-(
~
q
(./ 111 II ..,
.4}Y'.p
[ j:J ) I>...1
~I
h
I/...1",..,.;J.
I
3. Suppose we have an economy with two sectors; autos and food. The market for labor
is given below.
Wages
Wages
s
<;1'./ t vt/'
.e~(j.. 1
-1)
Labor
Food
(number
of
Employees)
Autos
a. Supposethe workers in the auto industry form a labor union. Show the impact the
union has on wages and employment levels in the auto industry through supply and/or
?-13
demandi-v l'
tlJ1ll>v?
L..J..
/1/1) k :
~ch
qJ
/1/j}.,1-
q
~ 1-1-1-
/hvJ'lv/,IJJ1
"'1
r~/J,Hj
r l/)?/JIy.
~f471'.J
4~'l
r P)1/CI ~
b. What is meant by the term "spillover effect?" Pleaseshow it and label it carefully as
the spillover effect.
I.v;;.";,
Vv"rhtrJ
I~
fI...
Vnlc/lfll e-t qvJ... ,"'4" f)..-y
-fi-t II('
J',) tj
1
r'J.-1't
~Q
h
.,£::,t?« '-vrh
,h
H'f'
fV,,'.'
tne11;If,..V.
"'
i--'h e
7A1 J
~,,)
t;-1 (jI""f'qJ.'. ,1
1'11,1vlh-1j
M
q;,~
.rv~~/)t
dl-
/,-R""vr('.,1
/"J'f
~
Ht'
,-,\-,4".-
C. What is meant by the term "threat effect?" No need to show it graphically, but discuss
in terms of the two industries.
T.f:
wiJYk1'/'}
Wtle;f'
Ih(rIJ6t)(
/.Nj)/"/r'f/"J
f,~
!3
")..13
W( I ,
~
Ih
r11'
4vl-u
IA)Vlh-,/
).,
1--'4.P
(../(71"...)
v!ve
t.. lA'"
!II...,{
(..1-'11
,--,.I.
1~.,(vJh-y
JA--fy
a'""tO~ I..L
;'f."IIS-oiI-
.5I VI'",
,t'1-
.'-Z."",-,-,;?/
1-.1"...t~ff...,
~/J.'
"I'
&1
hi",
~
~~
Jv
e,.r
d. There are a range of estimatesof the impact of unions on the wages of their members.
Pleasegive a number within the range discussedin class or the text.
(.//)1I).,
c: -20
~
wf/'-f
e'ffy-t"-"'17-t"J 11r
~ff.e()dW11J-(,,~ " J:...
e. Circle the best answer
(,-'J-~)
6vf
2.ti"7 r-f- (., e
i. Unions have a bigger impact on wages in the private rather than the public sector
ii.Unions have a bigger impact on the wages of less educatedworkers than on more
~cated
wage workers.
(jji;tfoth i and ii are correct
iv. neither i nor ii is correct
fj;.v~c.J.,rs)
oM-t"
Multiple Choice. Circe the best answer. Two points each.
4. Over the last several decades
a. the labor force participation rate of males has declined and so has the overall adult
labor force participation
b. the labor force participation rate of males has increasedand so has the overall
adult labor force participation
(9 the labor force participation rate of females has increasedand so has the overall
adult labor force participation
d. the labor force participation rate of females has increasedbut the overall adult
labor force participation has declined.
I~\.f"
5 In the United States in the period 1900 ~e saw
(i) a decrease in the workweek mainly due to the income effect
b. a decrease in the workweek mainly due to substitution effect
W4'eJ
CfiIf
c. both the income and substitution effects equally caused the decline.
d. the workweek did not decline in this period.
6. An increase in the wage rate would causea person's budget line to
3!\ to move farther out on the horizontal axis.
0>! to move farther out on the vertical axis.
c. to shift farther out in a parallel fashion to the original line.
d. to shift closer to the origin in a parallel fashion to the original line.
/'IJ J~
I
;1 e" I' "
vf
GIJv,;J +
/el! cI;--t,
~ ~
~ elA; h ""d I
l"'(J..'.'"'J(
~
.1'",-~
Le,J~
.of
the following statementsabout the Un~- States,Japan and Gennany is
lse?
(9
he averageworkweek in the United Statesis the highest of the three nations.
he averageworkweek in Japanhas fallen substantially in recent years.
The average workweek in Gennany has risen substantially in recent years./ViJ ~
All of the statementsare true.
e-t t--;I'{
"."
ich of the following statementsabout the labor
IS
true?
a. white women have a higher labor force participation rate than black women. /1""""'
b. married women have a higher labor force participation rate than single women./,,-,~
{5? the labor force participation rate tends to rise and then fall with age from 16 to 6.1"! b
d. all of the above statementsare true.
~
9. The text presented several critiques of the theory of the demand for labor. They
included all of the following except for
a. output could depend on wages. t'tt,<
't,'fJ
b. some firms don't maximize profits.
@ both of these were in fact given.
b. neither a nor b were given in the text.
d
,v't--(
10. The work of Grilliches pointed out that
v/'
(aJCapital and skilled labor were complements ~
~ Capital and unskilled labor were complements ~u, } ;..
c. Capital was a substitute for both skilled and unskilled labor ~
d. Capital was a complement to both skilled and unskilled labor. ~
11. Let us say that there are 130 million workers in the American labor force and that the
elastic~t)',of demand for labor is -.3. If we -4riyroll
taxes so firms find the cost of
labor ~f
one percent, then we would predict
a. the number ofworkers to rise by 1.3 m~ll~on
~
3
11. -"1
b. the number of workers to fall by 1.3 milhon
~ A w -.~
~C.the number of workers to fall by 490,000.
'7..d£.
3 ~...,"",)
---J
d. one of the above.
J'1.. ..
V)./JL
3"2.
12. In discussing the work that Markus Scheuer and I did about the Great American Job
Machine, we found that the 1990s saw a large number ofjobs created in all of the
sectors listed below except
@manufacturing
'/TA'feJ WIt JJ..""J
b. health care administration
c. business services/temporary workers
d. retailing.
13. The United States federal minimum wage
fr'\recently was raised to $6.30 per hour .
(J')Idid not have a negative impact on teen employment according to Card and Kreuger
c. applies to all workers in the labor force /&1>
1- .,, ..." I " I ;J-.
d. is earned, for the most part, by people who are in poverty.
14. If we look at the monopsony model of labor, firms hire the quantity of labor where
a. the marginal cost of labor intersects the supply curve.
b. the supply of labor intersects the demand for labor.
c the supply of labor intersects the marginal revenue product of labor.
ff'e
~J@the marginal cost of labor intersects the marginal revenue product of labor.
l-e(/..'.""1',
15. Suppose someonereceived a college degree. Their productivity and wages would be
~ .nly
edicted
by to
human
rise capital theory.
.by both human capital and screeningtheory./ --?
c. only by screening theory
d. only by signaling theory.
,)~/.I rJ.
"'d.
c~.L,!
e ~ 11 t.ty-V'
-i,
h
~
~
/Jy1I..(
16. Under the human capital model, a higher interest rate
@duces
future benefits to a larger degreethan costs. IJ,'1" h.t;t
cA ...1.
('..~
b. increasesthe probability of obtaining human capital. J"'H J-t. "/' lit,.
c. has no impact on costs after the current year. 1.,,"1
;0" Aflw
f(V1'-'")01
d. none of the above.
j e.,w"
J 111c., ~/I
C"/!f'J..
I..,,",",
(
I
17. Which of the following groups, all else held equal, is less likely to acquire human
capital?
(a} older workers compared to younger workers.
~ men compared to women.
S..{",...I--".. h",,-f'
In v.,! ~
~
re C-v-'-'7t
c. people from higher income families, rather than lower income families.
d. none of the above.
18. fu general,
a. employers pay for both firm specific and general on-the-job training.
b. employees pay for both firm specific and general on-the-job training.
c. employees pay for firm specific and employers for general on-the-job training
@employers pay for firm specific and employees for general on-the-job training.
&QJe.A ,
j"..A.. '.P1..t.;l--"
19. Given our discussion in class, within an internal labor market wages are set using all
of the following except
a. inertia
b. community wage surveys
c. social status
@all of these are used in internal labor markets.
20. hllooking at the work of Lazaer, we saw that
a. people are more likely to be change their job within a firm after five years than one
~ear.
vl'J'D[,4
~rms
tend to promote from within rather than hire from outside the higher one goes
up the job ladder.
c. both a & b are correct
d. neither a nor b is the case.
21. The gap between the wages of CEOs and other workers is greater in the United States
than in other developed Western nations. Which of the following best explains this?
a. human capital
~
.,L..
~
/ ../
b. screening hypothesis
/}"'J'l/
eJ'/
i"/..'
r'i~
5~n
c. signaling
(fJJ tournament theory.
22. Becker's Theory of discrimination deals with all of the following except
a. employers sacrifice profit due to a taste for discrimination
(!f; employers give the attributes of a minority group to an individual member of the
group.
.s~~/lac#f1 "'tIC
#,,;.
/Jt"c'i..c. employers won't hire as many minority workers if they perceive that customers do
not want to deal with minorities.
d. employers won't hire as many minority workers if they perceive that their
employees don't wish to work with minorities.
23. Which of the followin{F ~
a. occupational segreg~£
~
.ifferences
explanation of why women earn less than men?
I'
in levels of education edv.:.
.diff~r~nces
!n l~v~ls ~f training~
.statIstIcal dlscnmmatlon
I f v-el J
!~
hIY'
~
~
7
! -e ( J
"
,
t' '( .#'-f ""'i ~
,
1'1"
r;...1
24. Under the idea of comparable worth
a. all workers would receive the samewage
b. only market forces would set wages.
C~~rtr
c. both a and b would occur under comparable worth
(§)neither a nor b would occur under comparable worth
25. It is illegal
to set quotas for races and gender in hiring.
...
Ips.\,
"J
--
7
-
--
J.'~
Sl;.."t'
L
~
The Supreme Court case that
made the relevant rulIng was
a. Apex Hosiery
~ Bakke
l.{ Griggs
d. Sherman
26. Suppose that General Motors signs a contract with the United Auto Workers agreeing
that all employees will have to be union member~ This is an example of
a. a closed shop
~
~~
~
b. an open shop'...
1;", ".5
c. a right-to-work
@ a union
shop.
!J(> I!"II
/"\
27. The United Auto Workers are an example of a -lj1,dv.rJy,..I- union and not
surprisingly were prior to the merger of the AFL and CIO were a member of the
(i-v
a. craft, AFL
a tI
tv-IJ'...J,-e J
,n
b. craft, CIO
c. industrial. AFL
s Jt Yk-P
1/]
28. The idea of scientific management(Taylorism) is that finns
~"'\will pay a higher wage to increaseproducti:vity.
/)
~an
measure MRP and pay workers
accordIngly.
JI/J~
./ I;'7
--e
c. that workers in supervisory position should have status and be paid more.
d. all of the above.
29. Under the model presentedin class, a union's bargaining power is defined as
a. management's cost of agreeing / management's cost of disagreeing
(!i)nanagement's cost of disagreeing / management's cost of agreeing
c. union' s cost of agreeing / union's cost of disagreeing
d. union's cost of disagreeing/ cost of agreeing.
./l/i.J,L.
""t,.L
h,/~
.
30. Unionization quadrupled in the period 1932-45 due to all of the following except
a. more favorable labor legislation. w~~
/J--c"J.
b. government procurement contracts wwJl>
c the rise of craft unionism
~ll
of the above were factors in increasing union membership.
3l.1:4x
~e
Borjas reading
noted all of the following
gap in the earnings between immigrants
disappears
except for
and the native born population
in one generation.
b. the ratio of immigrant wages to native born wages has fallen in recent decades.
c. there has been a shift in the nation of origin of immigrants in recent decades. A
d. all of the above were noted by Borjas.
"va y
~v-vV"(/JP-f'
32. hnmigration into the United Stateshas
a. reduced taxes for the native born population
b. increased consumer prices due to greater demand
(c~ade upper income native born people better off on average.
y made lower income native born people better off on average.
ll/);7,1:
33. In tenns of the impact of immigration on the wages of the native population, spatial
analysis
a. finds a substantial impact on less skilled workers
(fj)fails to account for the fact that native- born workers vote with their feet ro
II",~
c. is not relevant after the passageof IRCA
;ltv
(-"7~.c--'7
d. is only relevant for Mexican immigrants.
34. The changesin U.S. border policy with IRCA, Operation Gatekeeperand Operation
Blockade resulted in
a. a decreasein the cost of a "coyote" 1? ?1
b. a decreasein the length that illegal immigrants stay in the United States /t/v.
/J1~;, ~
c. a decreasein the number of deathsdue to fewer attemptedborder cros~n~
1 ,~hq1'1u ..
r!i>
decreasein the wage of immigrants that make it to the United States.
35~ E ployees of the United Statesfederal government
a. e not allowed to go on strike at all.
.may go on strike if they are civilian, but not military employees.
c. may go on strike if they are not engagedin providing health, safety or protective
services.
d. only if they reject the settlement of a fact-finder.
36. The demand for union membership dependson
a. the cost of organizing workers. ~./rt'ty
~
the cost to the union of representing the worker ~v1"'.'tr
.he perceived benefit of union membership.
.all of the above affect the demand for union membership
').".1
Q..,; ,