epp_assignment02

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New York University *

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MISC

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Economics

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Feb 20, 2024

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Uploaded by ChefSnow17958

Economics of Public Policy Week 2 Assignment To receive credit, you must submit this assignment by the due date. Late assignments will not be accepted. 1. Consider a country that does not allow international trade in cars or airplanes. There is a substantial reduction in the price of gasoline and this reduction is expected to be permanent. 1.1. Consider the labor market for workers engaged in car manufacturing. Explain what happens to wages and employment in the car industry in light of the gasoline price reduction. 1.2. Suppose that workers who manufacture airplanes are also qualified to manufacture cars. There has been no change in the price of jet fuel. Explain what happens to wages and employment in the airplane manufacturing industry in light of the gasoline price reduction. Describe the new long run equilibrium in the labor market for car and airplane manufacturing workers. 2. The H2A visa program allows employers in certain industries to hire foreign workers temporarily if they show that they cannot find U.S. workers for the jobs. These foreign employees are still subject to the usual minimum wage requirements. A group of CEOs in a non-H2A industry are claiming that the minimum wage is causing a shortage of workers, and have lobbied for an expansion of the H2A visa program to cover their industry. 2.1. Evaluate this claim. How will expanding the H2A program help the industries currently not covered by the H2A program? 2.2. Explain how a shortage of workers in their industry can be solved without an expansion of the H2A program. 3. Suppose that licensed therapists currently require a master’s degree. The government has announced that starting in 2 years time, all therapists will be required to have clinical doctoral degrees that require an additional 2 years of training. What would you expect to happen to wages in the market for therapists over time? Explain your reasoning. 4. You observe that in a supermarket, full time workers at the fish counter make 30 percent more than those at the bakery counter. The fish workers are all men, and the bakery workers are all women. Is this evidence of gender discrimination? What are alternative explanations of this pay differential? Explain your reasoning.

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