Problem set 1 - SP2024

pdf

School

Washington State University *

*We aren’t endorsed by this school

Course

323

Subject

Economics

Date

Feb 20, 2024

Type

pdf

Pages

Uploaded by UltraGiraffePerson1053

Economics 5850: Labor Economics Spring 2024, Professor Brown Problem set 1 Name:___________________________________ You may work in groups of up to four members on this problem set. Problem sets will be submitted via the class Carmen page. Look for “Problem Set 1” under “Assignments” and follow instructions for submitting your problem set file. Each group member must submit a copy of the group’s Problem Set 1 in order to earn credit for the problem set. Problem Set 1 will be graded out of 10 points. Labor Supply Question 1. Labor Supply Theory: Figures (a) [1 point] Using the Power Point slides on the theory of labor supply posted on the class web page and discussed in class meetings, draw a Backward Bending Labor Supply curve. Hours should appear on the horizontal axis and wage on the vertical axis. [1 point] What does the shape mean? Are desired hours of work a monotonic function of the worker’s wage? (b) [1 point] Again following the figures from our Power Point slides on the theory of labor supply, draw a worker choosing optimal hours, with Leisure (L) on the horizontal axis and Consumption (C) on the vertical axis. Clearly label the optimal L (and hence T – H) chosen by the worker Now raise the wage once by tilting the budget constraint up the vertical (C) axis. How does the worker’s choice of hours change? [1 point] Raise the wage one more time by tilting the budget constraint even farther up the vertical (C) axis. How does the worker’s choice of hours change this time? Does this worker display a backward bending labor supply?

Question 2. Labor Supply – Data Analysis I have created a Project representing Problem Set 1 on the Rstudio cloud computing/collaboration site rstudio.cloud. I will share a link to the project with the class. During our next class meetings, in person, live Zoomed, and recorded, we will practice going to Rstudio.cloud and setting up free student accounts. I will share a link to the Problem Set 1 project on Rstudio.cloud via our class Carmen Canvas page. We will also work on solving the following data analysis questions together as a class. Please attend class or view the recordings for guidance. (a) Load dataset PS1_data.Rdata in your instance of our class Problem Set 1 project. This dataset contains more than 20 distinct variables describing the work and demographic characteristics of 31-35 year-old U.S. workers in 2014, as recorded by the National Longitudinal Study of Youth’s 1997 cohort (our nation’s leading panel data resource on young workers, which is developed and maintained by OSU’s own CHRR.) [1 point] Create a scatter plot of worker hours (Hours2014) on the horizontal axis and wage (wage) on the vertical axis. Save and submit your scatter plot (as pdf, or if you’re stuck just photograph it and upload the photo). Is this scatter plot particularly informative? Why or why not? (b) [1 point] Create a variable representing the natural log of hours, and one representing the natural log of wage, using the “log(.)” command in Rstudio. Now generate a scatter plot of the natural log of hours on the horizontal axis against the natural log of hours on the vertical axis. Again, save and submit your scatter plot. Is this scatter plot more informative than the plot in (a)? Why or why not? (c) [2 points] Using Ordinary Least Squares, run a simple regression of the natural log of hours on (a constant and) the natural log of wages in this dataset. Submit your regression output. What is your estimate of the percent change in hours when wage increases by one percent? (d) [2 points] Next, create a dataset that is a subset of your PS1_data dataset that contains only those workers who receive the EITC. They are the workers for whom variable EITC = 1 or 2. (I

have posted a codebook on these NLSY97 variables to our Carmen Canvas page for those who are interested.) Again, using Ordinary Least Squares, run a simple regression of the natural log of hours on (a constant and) the natural log of wages in this new, EITC-only dataset. Submit your regression output. What is your estimate of the percent change in hours for the EITC recipient worker when wages increase by one percent? Is the EITC recipient worker more or less responsive to wages than are other workers in the full sample? Do you think the bulk of these EITC recipient workers are likely on the phase-in, flat, or phase-out region of the EITC budget constraint? [Note: This dataset includes only labor market participants. By ignoring the effects of the EITC on whether to work, this exercise is ignoring the major benefit of the EITC design. Therefore please don’t take away from part (d), above, that the EITC discourages all work!]

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

6921 Assignment 2_SP23.docx

ERS 205 Assignment 1.docx

Problem Set 4.pdf

Problem Set 3.pdf

Problem Set 1 .pdf

Problem set 3 - SP2024.pdf

A11ST.docx

reply to discussion board week 1.docx

Business final exam review.pdf

busn 5000 week 5 hw.docx

09+Monopoly.docx

Public Finance_Answers to Practice Questions for First Midterm Exam_Spring 2024.doc

Recommended textbooks for you

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

Managerial Economics: Applications, Strategies an...

Economics

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:Cengage Learning

ECON MICRO

Economics

ISBN:9781337000536

Author:William A. McEachern

Publisher:Cengage Learning

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics: Private and Public Choice (MindTap Cou...

Economics

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Micro Economics For Today

Economics

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Cengage,

SEE MORE TEXTBOOKS

Recommended textbooks for you

Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,