Question
OpenTech Co. just hired workers, but is unable to distinguish high-productivity workers call XXX from low-productivity workers (call ZZZ . The firm wants to pay
OpenTech Co. just hired workers, but is unable to distinguish high-productivity workers call XXX from low-productivity workers (call ZZZ . The firm wants to pay $1,000,000 to call XXX workers and $600,000 to Type B workers as a total life time salary, based on their productivity. The firm can use education as a device to distinguish call XXX workers from Type B workers. It costs $40,000 per year for call XXX workers to get an education and $80,000 per year for Type B workers. Suppose the firm makes the following announcement to all workers: "If you get at least xyears of education, you will receive $1,000,000 of life-time salary; otherwise, you will receive $600,000 of life-time salary." What is the value of xthat discourages Type B workers from getting an education? (Use two-digit decimal in your answer.)
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