econ test 3

The claim that college graduates make on average $1,000,000 more over their lifetime as a result of their college education is problematic because

Ability Bias

Holding all else constant, which of the following factors would tend to make educational investments more attractive?

An increase in the age at which people retire

is intended to commit firms to a schedule for rapidly overcoming unequal career opportunities afforded to women and minorities.

Affirmative action planning

The distribution of annual earnings for full-time wage and salary workers is

skewed to the right

In the context of on-the-job training, training that is usable only at the firm which provides the training is referred to as

specific training

The ability, discrimination, and cost of funds factors that affect schooling levels tend of offset each other so that we don't observe much earnings inequality as a result of those factors.

False

Suppose a training program costs $2,000 and results in a benefit of 1000 in one year, and $1,200 in the two years. The interest rate is 8%

Frieda's optimal years of schooling are higher than Ollie's.

The Civil Rights Act of 1964 bans discrimination based upon (select all the apply)

-Religion -Race -Color -Sex -Country of Origin

What are the primary reasons why the capital market is biased in favor of physical rather than human capital? Select all that apply.

-Young people, who are most likely to invest in human capital, don't have established credit ratings. -Lenders can't repossess human capital.

Advocates of the Signalling model (select all that apply)

-see the educational system only as a means of finding out who is productive -don't believe that education enhances worker productivity

Assuming the interest rate is 9 percent, what is the present value of $1,000 received 12 years from now? Round your answer to two decimals.

355.53

Suppose Betty calculated a measure of inequality that uses earnings including fringe benefits of all workers. Bobby calculates the same measure, but uses only earnings without accounting for fringe benefits. Who is likely going to find a higher level of inequality?

Betty will likely find a higher level of inequality than Bobby

Different dimensions of ability (such as intelligence and motivation) can have multiplicative effects on earnings inequality. This means that

Intelligence and motivation together can have a greater impact on earnings inequality than the sum of their parts

The Eual Pay Act of 1963 outlawed separate pay scales for men and women using similar skills and performing work under the same conditions. This resulted in

Less labor market access for women, since discriminatory hiring based on gender was still legal.

Consider the following states' Gini coefficients. Which state is the most unequal in terms of their income distribution?

Louisiana

Holding all else constant, which of the following factors would tend to make educational investments more attractive?

Lower local manufacturing wages for low-skill jobs

Which one of the following is NOT considered a way to improve human capital?

Making a financial investment in a college-savings account.

During a family reunion at the park, 4-year old boy Gabriel is going to explore the tadpoles by the pond. His twin sister Penelope is asked to stay behind so she doesn't get her new princess-dress dirty. This could be an example of

Pre-market discrimination

The multifactor approach to the earnings distribution specifically considers the following factors (select all that apply)

discrimination ability chance and risk taking family background

When a that firm doesn't hire someone due to their race or gender, we are looking at

employment discrimination

Which of the following is an indirect cost of college education?

foregone earnings in an alternative use of time

In the context of on-the-job training, training that is usable at all firms and industries is called

general training

The College-High School wage premium

has steadily increased since the 1970s

What are reasons for the observed increase in earnings inequality? (Select all that apply)

increased demand for skilled workers demographic changes the decline of unionism deindustrialization

Higher-income families tend to provide more preschool education for children, and are more likely to live in areas that have better schools. This is an example of the

indirect effect of family background (via human capital decisions) on earnings inequality

The decision rule for human capital investment is that

individuals should increase schooling so that the marginal rate of return of schooling is equal to the interest rate.

All else equal, a person who expects to face discrimination in the labor market will

rationally invest less in their human capital than a person who does not expect to face discrimination in the labor market

The gender pay gap

shrank between the late 1970s unti the 1990s, but has remained largely unchanged since then

Unmarried men under the age of 25 pay higher car insurance premiums than married females of the same age. This is an example of

statistical discrimination

Suppose that the average characteristics of two groups converge over time. As a result, we expect

statistical discrimination to become less prevalent

foregone earnings in an alternative use of time

subsidized

The Gini coefficient is defined as

the area between the Lorenz curve and the diagonal, as a proportion of the total area below the diagonal

Studies have shown that earnings mobility is lowest for

the bottom quintile and the top quitile of the earnings distribution

If all workers in an economy have exactly the same variation in earnings across their life cycle, then

there will still be earnings inequality across individuals at any point in time

According to Gary Becker's taste for discrimination model, employers who discriminate lose because

they incur higher wage costs compared to non-discriminatory firms.

A present-oriented person tends to have higher rates of discount for the future. As a result, they impute smaller benefits to college education compared to future-oriented people.

true

Data shows that females have flatter age-earnings profiles compared to men.

true

Regarding the gender pay gap, an important study by Blau and Kahn finds that _____________ of the pay gap can be explained by differences in experience, industry, and occupation

two thirds

By ignoring the consumption benefits of education, researchers _______________ the rate of return of education.

understate