Quantitative Problems

 1. Analyze how a reduction in international-trade barriers affects the labor market for steelworkers. 2. Suppose there are two industries, airlines (A) and breweries (B), and that the demand for secretarial labor, L, in each industry is and . If the supply of secretarial labor is L = 2W, then what are the equilibrium wage and employment levels in the secretarial labor market? How many secretaries work in the airline industry? 3. It is sometimes suggested that it is fairer for the government to raise revenues by levying a payroll tax on rich corporations rather than levying an income tax on (less wealthy) workers. Is it? 4. Suppose that a large number of employers populate a given industry. Assume that a given number of homogeneous workers, , supply their labor inelastically to the industry. Suppose that, at each of the firms, the marginal revenue product of labor is constant and that it equals \$50 per worker (per day). Depict the industry's demand and supply curves. What is the equilibrium wage and level of employment? What is each firm's equilibrium profit level? Is this reasonable? 5. Suppose in P4 that there are two types of workers: those with high (H) and low (L) abilities. The number of each type of worker is and and their constant marginal revenue products are, respectively, \$200 and \$50. What is the equilibrium outcome in this case? 6. Explain how an employment subsidy \$B can benefit low-wage workers. Given the obvious benefits, why is it that the take-up-rate among employers is so low? 7. Assume that the supply of labor to some industry is inelastic at and that the industry possesses a standard, negatively sloped labor-demand curve . Depict the equilibrium. Now suppose that the government mandates that every employer must pay each worker's health insurance premiums, \$ρ. What is the effect of this policy? 8. Let denote the wage differential between industries a and b. Suppose that the wage offered by industry a is constant at , but that b's wage, , is variable. Assume that the supply of labor to industry b is and that b's demand for labor is . What is the equilibrium compensating wage differential ? What would happen if increased to \$20,000?.