Labor Equilibrium and Human Capital

• Where the supply and demand curves meet (W* E*)?

  Equilibrium point
• If w > w*, there is a? Competing for the few available jobs, putting a downward pressure on wages

  Surplus of workers
• If w < w*, employers want to _ a lot of workers? Few persons are willing to work and putting an upward pressure on wages

  hire
• all profits accruing to firms, given by the area of P?

  Producer surplus
• the difference between the worker's wage and the value of his time outside the labor market?

  worker surplus
• government policies, worker's preferences, nonlabor income, wage rate, population?

  shifts labor supply
• government policy, automation/AI, wage rate, changes in price in the product market, changes in price of inputs of production?

  shifts labor demand
• competitive equilibrium in two labor markets linked by?

  migration
• in invisible hand, workers and firms search for better opportunities accomplish one goal that no one in the economy had in mind?

  efficient allocation of resources
• corresponds to any stock of knowledge or characteristics that a worker has that contributes to his or her 'productivity"?

  human capital
• In labor econ, human capital is level of formal education acquired by workers?

  True
• human capital increases worker's productivity in all tasks?

  Becker
• human capital is not undimensional, since there are many dimensiions or type of skills?

  Gardener
• human capital = capacity to adapt?

  schultz/nelson-phelps
• human capital is a capacity to work in organization?

  bowles gintis
• observable measures of human capital are more a signal of ability than characteristics?

  spencer
• human capital refers to the unique set of abilities; skills mostly acquired in school; formal and formal OJT programs?

  Borjas
• education plays a crucial role in improving labor market outcomes?

  true
• difference in educational attainment among workers are significant because education is strongly correlated with labor force participation rates, unemployment rates, and earning?

  education in the labor market
• allow us to compare dollar amounts spent and received in different time periods?

  present value
• a figure showing the wage path over the life cycle?

  age earning profile
• 2 general types of costs in going to college?

  opportunity costs, out-of-pocket expenses
• the individual's decision to obtain college education holds if?

  $PV_col> PV_HS$
• rate of discount plays a crucial role in determining whether a person goes to school or not?

  true
• upward sloping more education, higher earnings potential?

  true
• tells us by how much a worker's earnings would increase is she were to obtain one more year of schooling?

  slope
• steeper at lower levels of schooling and flatter at higher levels of educations?

  concave
• percentage change in earnings resulting from one more year of schooling?

  marginal rate of return to schooling
• when should i stop schooling. When the marginal rate of return to schooling equals the discount rate (stopping rule)?

  optimal level of schooling
• two key factors that led to different workers obtaining different levels of schooling?

  difference in rate of discount, difference in marginal rate of return to schooling
• workers who discount future earnings heavily do not go to school because they are present oriented?

  true
• a higher ability shifts the marginal rate of return schedule to right?

  true
• different MRR curves reflect differences in the ability to convert education into productive work?

  true
• wage differential capture two things?

  difference in years of schooling, differences in ability
• if there are unobserved ability in differences, earnings differentials do not estimate the returns to schooling called?

  ability bias
• ability bias may lead to fatally flawed government education policy?

  true