30.01.2018 KATTAA32 Työn taloustiede I 5.00 op. Muu

KATTAA32 Labour Economics. Course exam retake Jan 30th 2018.
Total points for the exam is 27 and you need 11 to pass. 

Kuulustelija: Allan Seuri

Kysymys 1
The Mariel Boatlift was an event of an inflow of Cuban migrants, mostly low-skilled, into Miami labor markets. It is plausible to suppose that these migrants would compete for jobs with African Americans who also tended to have low skills at that time and place. The following table gives the unemployment rate for African Americans in Miami and comparison cities (e.g. Atlanta, Houston) before and after the Mariel Boatlift.

Answer the following:
1.1. What is the difference-in-difference estimate for the effect of migrant inflow induced by the Mariel Boatlift on African American unemployment? [2 pts]

1.2. Why is this result problematic? Give two reasons mentioned by Borjas in the textbook. [2 pts]
Kysymys 2
2. Answer briefly the following questions on comparative statics using supply-demand framework. Your answer must include i) a reason why a labor demand or a labor supply curve shifts, and ii) what happens to wages and employment.

2.1. Video games make leisure more pleasant. What do you suppose happens to young people’s labor markets when they are introduced? [2 pts]

2.2. An engineering advance makes a job safer than what it was before. What happens? [2 pts]

2.3. Suppose we are looking at the labor market for physicians. Suppose the government then reduces intake into medical school. What will happen in the physicians’ labor market? [2 pts]

2.4. Suppose there is a binding minimum wage (i.e. minimum wage above the market-clearing wage rate). Suppose then that the government offers training to low-skilled unemployed workers. What do you suppose happens? [2 pts]
Kysymys 3
Suppose unions increase wages by 10 percent and the demand curve for union workers has an elasticity of -0.5. Suppose further that 80 percent of workers were unionized and labor’s share of national income is 0.6. What is the efficiency loss of unions relative to national income? If you do not have a calculator, please note that giving the correct formula for the answer is sufficient. [2 pts]
Kysymys 4
4. In December 2017 flows in the US labor market were as follows: 1,835,000 people went from unemployment to employment and 1,631,000 from employment to unemployment.

4.1. Why is this not a steady state? [2 pts]

4.2. Based on your understanding of the matching function, how would the labor market flows adjust to bring about a steady state? [2 ps]
Kysymys 5
5. Answer whether the following claims are true or false:

5.1. Labor demand is more inelastic the greater labor’s share in total costs. [1 pts]

5.2. Under a monopsony firm’s marginal cost equal marginal the value of marginal product. [1 pts]

5.3. Under a monopsony workers are paid according to the value of their marginal product. [1 pts]
Kysymys 6
6. Answer the following briefly:

6.1. Why is the short-run labor demand curve for an entire industry not the sum of short-run demand curves of individual firms in that industry? [2 pts]

6.2. What is the added worker effect? [2 pts]

6.3. How can a minimum wage increase employment if firms have monopsony power? [2 pts]