1. Job A pays $30,000 a year. Job B is completely identical in all aspects excep

Question

1. Job A pays $30,000 a year. Job B is completely identical in all aspects except it is located in an area that has a 10% higher cost of living. In order to compete, Job B would need to pay _____________________. This is known as a __________________________________.

2. Explain the difference between the human capital and signaling theories of education

3. Identify whether each of the following raises labor demand or lowers labor supply (includes slowing labor supply growth) in labor market X.   

Increase the minimum wage for workers less skilled than labor market X.

Pass laws prohibiting children from working in labor market X.

Require a license to work in labor market X.

Increase tariffs on imports that compete with labor market X employers.

Limits on immigration for those who might work in labor market X.

Buy American campaign run by workers in labor market X.

4. What is the most common way modern labor unions use to raise wages? This will result in the fewest jobs lost if labor demand is elastic or inelastic? This will result in the most number of new worker entries if labor supply is elastic or inelastic?

5. Briefly describe each of the 4 main pieces of labor legislation.

Explanation / Answer

(2) In a one-shot static setting, signaling and human capital theories might have the same empirical implications because the learning and pooling effects can produce similar links between education and wages (again assuming someone can fake an interview). But not over time and of course the wage dispersion for an educational cohort does very much increase with time. The workers don

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