Question
Besides the obvious benefits of increased workplace safety, what are some of the economic effects of these worker protections? Assume a competitive product market and
Besides the obvious benefits of increased workplace safety, what are some of the economic effects of these worker protections?
Assume a competitive product market and a competitive labor market for lumber (tree-harvesting) in two different markets in California. In Northern California, the wage rate is $20/hr. But because temperatures are much higher in Southern California, the going wage rate is $25/hour.
Some lumberjacks are willing to endure higher temperatures in Southern California in exchange for a wage premium of $5/hr. Those that prefer more comfortable working conditions earn less but are willing to sacrifice the wage premium for more comfort.
Now suppose that the government mandates a workplace safety condition that requires lumberjacks to take a 20-minute break every hour when temperatures exceed 89 degrees F.
- What will be the effect of this rule on the relative wages of lumberjacks in Southern California compared to Northern California? What will be the effect on the non-monetary wages of Southern Californian lumberjacks? (assume lumberjacks can move between the two markets)
- From the point of view of Southern Californian lumberjacks, are they better or worse off as a result of this law?
How might this apply to other mandated benefits?
- How would mandated paid maternity leave affect the wages and labor market for women?
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