LABOR ECONOMICS HW

Consider a fictional economy with two types of workers: men (m) and women (f). The log of labor market earnings, In w is a function of years of schooling, S and years of work experience, X. The table below describes the mean of each variable for each type: m S 15 14 X 10 9 Regression estimates for each type are: In wm = 0.5 + 0.45m + 0.2Xm In wy = 0.4+0.3S, + 0.1X a. Do a Oaxaca-Blinder decomposition. How much of the predicted earnings difference between men and women is "explained" by differences in characteristics? How much is "explained" by differences in coefficients?. b. Is this strong evidence for discrimination?The labor market of Nowhere, WV is monopsonistic. The only employer in town is ACME Coal Mine, Inc. Migration out is expensive. The value of the marginal product of labor is: VMP_ = 12 - L The inverse labor supply curve is: W = LS The marginal labor cost curve is: MLC = 2L a. Quantify the deadweight loss in this labor market due to monopsony. b. Quantify the surplus transferred from workers to ACME due to monopsony.Consider the labor market for low-skilled workers. The value of the marginal product of labor is: VMP_ = 15 -0.001L Labor supply is described by the following equation: Ls = 1000w a. Find the equilibrium wage rate and employment level. b. Find the firm surplus and the worker surplus. c. Suppose the government imposes a $10 minimum wage in this market. Quantify the effect of this on the wage rate, employment level, worker surplus, firm surplus. Additionally, find the dead-weight loss