Please help me with Analytical Question no.1 Please show all work CHAPTER 7 UNEM
ID: 1101265 • Letter: P
Question
Please help me with Analytical Question no.1
Please show all work
CHAPTER 7 UNEMPLOYMENT AND THE LABOUR MARKET 155 What is the participation rate as a proportion of the working-age population? (c) (d) What is its unemployment rate In Greece, the participation rate (as percentage of working-age population) in 1998 r men aged 15-24 was 44%: aged 24-54, 94%; and aged 55-64, 57%. For the United States these numbers were 68%, 92% and 68%. In Greece, the corresponding figures for women were 37%, 59% and 24%: and for women in the United States, 63%, 76.5% and 51%. What do you think explains these cross-country differences 3. ion 7.2) If the population was prepared to work substantially longer hours for higher wages what would be the long-run impact of capital accumulation and technological progress on the labour market? (section 7.3) What influences the wage demands that you make of your current, or potential employer (Section 7.5) How do the following affect the natural rate of unemployment? An increase in tariffs on imported goods. (b) Making unemployment benefits taxable More expenditure on retraining programmes for the unemployed. d) Increases in indirect taxes on product prices. (e) Increases in income tax on labour income. 6. (Section 7.5) Find the latest unemployment rate and job openings rate for the US economy (www.bls.gov job openings are on the Jolts database). Are the two numbers consistent with the Beveridge curve shown in Figure 7.15? 7. (Section 7.7) If generous welfare payments support the long-term unemployed, is employment protection legislation a good thing? 8. (Section 7.8) Is there a link between the flexibility of US labour markets and the country's large prison population? ANALYTICAL QUESTIONS (Section 7.2) A family has a target of $1500 for the income that it needs to earn each week. Both 1. adults in the family work at flexible jobs where they have a choice over how many hours to work They decide that the relative number of hours they should work should be equal to the ratio of their hourly wage rates. The female earns $20 an hour and the male $15. How many hours does each of them work? What happens when the female gets a 20% wage rise to $24 an hour? What happens if both adults get a 20% pay rise? What does this imply about their income and substitu tion effects? 2. (Section 7.2) Using a spreadsheet, consider the Cobb-Douglas production function: A KPL where Y, is output at time K, is capital: L is labour hours worked: A, is total factor productivity at time and b is 0.3. Analyse how the marginal productivity of labour changes when: (a) A increases by 10% (b) K increases by 10% (c) L increases by 10 (d) b falls from 0.4 to 0.3Explanation / Answer
The ratio of wage female to male = 20:15 = 4:3
The ratio of working hours female to male = 4:3
Total income required = $1500
Let male work for 3x hours, then female works for 4x.
Income = 20*(4x) + 15*(3x) = 80x + 45x = 125x
x = 1500/125 = 12
Therefore male works for 36, female works for 48 hours.
If female gets a wage rise of 20%
New female wage = $24
New ratio of wage female to male = 24:15 = 8:5
New ratio of working hours female to male = 8:5
Total income required = $1500
Let male work for 5x hours, then female works for 8x.
Income = 24*(8x) + 15*(5x) = 192x + 75x = 267x
x = 1500/267
Therefore male works for 28.1 hours
Female works for 44.9 hours.
ii) If both adults gets a wage rise of 20%
New female wage = $24
New male wage = $18
New ratio of wage female to male = 24:18 = 4:3
New ratio of working hours female to male = 4:3
Total income required = $1500
Let male work for 3x hours, then female works for 4x.
Income = 24*(4x) + 18*(3x) = 96x + 54x = 150x
x = 1500/150 = 10
Therefore male works for 30 hours
Female works for 40 hours.
In case 2 due to rise in wage only of females there is a subsitution effect, as the proption of working hours ratio of female to male increases to 8:5.
In case 3 only income effect acts as both wages rise with the same amount.