Micro Econ Chapter 19

Which of the following is not correct? a. Signaling theory explains why additional schooling does not affect worker productivity but rather signals a correlation between natural ability and education. b. The theory of compensating wage differentials explains differences in wages as a result of dangerous working conditions. c. The human capital theory suggests that firms pay equal wages to all workers regardless of gender or race. d. Discrimination against workers of a certain race or ethnicity is often in conflict with a firm's desire to maximize profits.

The human capital theory suggests that firms pay equal wages to all workers regardless of gender or race

Underwater welders are known to have high wages and work on average a fraction of a 40 hour workweek. Which of the following would push the wages for underwater welders higher?

The job is very dangerous

At least some of the differences in pay between men and women can be explained by the fact that, on average, men have attained better schooling, have more job experience, and may do more unpleasant jobs

True

Firms are willing to pay more for workers with greater human capital because workers with greater human capital have a greater value of marginal product.

True

Human capital is increased by education and on-the-job training

True

Workers on the night shift receive a compensating differential to offset the disagreeable nature of working at night

True

Marshall and Lily work at a local department store. Marshall, who greets customers as they arrive, is paid less than Lily, who cleans the bathrooms. This is an example of

a compensating differential

The forces of competition in markets with free entry and exit tend to eliminate wage differentials that arise from discrimination by

employers

Measurable variables like age, years of education, and experience

explain less than half of the variation in wages in our economy

Ted leaves his job as a high school math teacher and returns to school to study the latest developments in computer programming, after which he takes a higher-paying job at a software firm. This is an example of

human capital

Among full-time U.S. workers, white women earn about _______ percent less than white men, and black men earn about ________ percent less than white men.

20, 20

If there is a difference in wages among groups, it is evidence that there is discrimination in the labor market.

False This statement is false. The difference in wages may be due to differences in human capital or job characteristics.

A compensating differential is a difference in wages paid to workers who are discriminated against and those who are not discriminated against

False This statement is false. It is the difference in wages that arises to offset the nonmonetary characteristics of different jobs

If the signaling view of education is true, a policy of increasing the education of workers will increase the wages of all workers.

Fasle This statement is false. Education would not increase productivity and would have no effect on wages.

Since 1974, the gap between the wages of unskilled workers and skilled workers in the United States has narrowed

Fasle This statement is false. The gap has been widening

A business consulting firm hires Robin because she was a math major in college. Her new job does not require any of the mathematics she learned, but the firm believes that anyone who can graduate with a math degree must be very smart. This is an example of

signaling

Sales based commissions reward

work effort

It is difficult to measure to what extent discrimination affects labor market outcomes because

workers differ in their attributes and the types of jobs they have

Measuring to what extent discrimination affects labor market outcomes is difficult because

workers differ in their attributes and the types of jobs they have