LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 7, Problem 15P
a)
To determine
The international correlation of earnings for improved educational outcomes for all populations.
b)
To determine
The effect of the elimination of legacy admits to colleges and universities.
c)
To determine
The effect of the implementation of a federal inheritance tax.
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Suppose two households earn $50,000 and $84,000 respectively. What is the expected percent difference in wages between the children, grandchildren, and great-grandchildren of the two households if the intergenerational correlation of earnings is 0.4? Show your work.
Children: __________________
Grandchildren: __________________
Great-grandchildren: __________________
Consider an earnings function. In addition to the usual explanatory variables of experience and schooling, one can include variables for reflecting all of the following factors except:
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Suppose that education is the only factor that affects productivity and that an additional year of education raises wages by 2%. Suppose in 2011 gender wage gap was 13%, and the average man had 15 years of education while the average women had 14 years of schooling.
a) Using the wage gap decomposition technique, calculate how much of the 13% wage differential is due to discrimination?
b) Now suppose in 2021 the gender wage gap is 10%, but the average woman’s education level is increased to 17 year and the average man’s education increases to16 years. (Assume that the return to education stays same at 2%),
Was there a decrease or an increase in wage discrimination in the decade? Why?
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