Difficulty in measuring the extent of discrimination.

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Consider the simple discrete job search model that we studied in class. Only the unemployed can receive one offer per period from F(w) that is a uniform distribution on [0,2]. There is a constant probability of being laid off at the end of each period while employed. Assume that she can get a new offer right away when laid off. We want to understand the reservation wage, WR, in this model. Assume that u(c) = c. The parameters are a discount factor ẞ and an unemployment benefit b.R and show that T is contraction on [0, ∞). Explicitly state any additional assumptions that you may need.(Grading guide line: 5pt for the exact form of T, 10pt for showing contraction, and 5pt for stating correct assumptions.)< (b) Discuss why (a) is useful to understand the reservation wage wд in this economy.< (c) We write WR = WR (b,ẞ,λ) to reveal its dependence on (b,ẞ,λ). Show that 0 ≤ aWR дь OWR дл ≤1 and ≥0. What about ? awR ав State any additional assumptions that you may need.< (d) Briefly explain the…

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Chapter 19, Problem 5CQQ

To determine

Difficulty in measuring the extent of discrimination.

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Consider the simple discrete job search model that we studied in class. Only the unemployed can receive one offer per period from F(w) that is a uniform distribution on [0,2]. There is a constant probability of being laid off at the end of each period while employed. Assume that she can get a new offer right away when laid off. We want to understand the reservation wage, WR, in this model. Assume that u(c) = c. The parameters are a discount factor ẞ and an unemployment benefit b.R and show that T is contraction on [0, ∞). Explicitly state any additional assumptions that you may need.(Grading guide line: 5pt for the exact form of T, 10pt for showing contraction, and 5pt for stating correct assumptions.)< (b) Discuss why (a) is useful to understand the reservation wage wд in this economy.< (c) We write WR = WR (b,ẞ,λ) to reveal its dependence on (b,ẞ,λ). Show that 0 ≤ aWR дь OWR дл ≤1 and ≥0. What about ? awR ав State any additional assumptions that you may need.< (d) Briefly explain the…

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show written calculation for B