EC317 Problem Set Flashcards
How many hours will a person allocate to leisure activities if her indifference curves between leisure and consumption are concave to the origin?
(MT PS1 Q1)
1) Explain briefly how the returns to education change when “experience” is added to regression when determining wage and why.
The rate of return from education is now larger and equals 7.4%. This is because more educated people are on average less experienced and since experience aects wage, omitting this variable in 1) leads to a downward bias.
If add a measure of intelligence (iqscore). How does it affect the returns to education? Is it what you expected? Explain
** IV solution for ability bias problem
(Common Question)
Explain “local average treatment effect” of IV instrument
Problem Set 10: Implications of Becker’s human capital model
General vs specific training
Why stock option for CEO would result in company bankrupcy?
How might stock options be changed to try to prevent situations like what happened at Enron from occurring in the future?
The back-loaded (deferred) compensation model predicts that the present value of compensation should be equal at the company- owned and franchisee-owned restaurants. Explain why.
Provide explanation for the concave relationship betweenwage and tenure in the case of franchising.
How about in the case of company-owned restaurant?
As noted above, the franchisee-owned restaurants have no incen- tive problems, therefore the concave tenure-earning profile must be because of the optimal timing of the investment in post-school human capital. For the company-owned restaurant, the steeper concave shape is an outcome of the post-school human capital and of the back-loaded compensation.
Introducing an Earned Income Tax Credit policy could reduce some workers’ labour supply.
(Exam 2017)
Explain the relationship between wage and experience
(2018 Q10)
Interactions between experience and education
What is the effect of an increase in the price of market goods on a worker’s reservation wage?
(PS3)
Self-sufficiency project
(PS3)
Self-sufficiency project:
Explain and interpret the findings reported in the last two columns.
Self-sufficiency project:
Do the program’s findings reported in this table concur with the static model of labor supply? Explain your answer briefly.
(PS3)
Suppose the earnings test floor is raised from $5,000 to $10,000. What are the possible labour supply responses of retirees to this change? How many separate regions of the budget constraint do you have to consider for the analysis now?
(Look at the answer)
(Look at the answer)
**PS5
Identification approacch
(PS5)
Give one concrete example why the approach that Angrist and Evans use might violate the exclusion restriction. Do you think that this is a serious problem?
(PS5)
