ONLINECO 

Chapter 19. Earnings and Discrimination. Gregory Mankiw. Exercises 1-5. Principles of Economics. 7th edition

 

1. College students sometimes work as summer internsfor private firms or the government. Many of thesepositions pay little or nothing.

a. What is the opportunity cost of taking such a job?

b. Explain why students are willing to take these jobs

c. If you were to compare the earnings later in life of workers who had worked as interns and those who had taken summer jobs that paid more, what would you expect to find?

 

2. As explained in Chapter 6, a minimum-wage law distorts the market for low-wage labor. To reduce this distortion, some economists advocate a two-tiered minimum-wage system, with a regular minimum wage for adult workers and a lower, “subminimum” wage for teenage workers. Give two reasons a single minimum wage might distort the labor market for teenage workers more than it would the market for adult workers.

 

3. A basic finding of labor economics is that workers who have more experience in the labor force are paid more than workers who have less experience (holding constant the amount of formal education). Why might this be so? Some studies have also found that experience at the same job (called job tenure) has an extra positive influence on wages. Explain why this might occur.

 

4. At some colleges and universities, economics professors receive higher salaries than professors in some other fields.

a. Why might this be true?

b. Some other colleges and universities have a policy of paying equal salaries to professors in all fields. At some of these schools, economics professors have lighter teaching loads than professors in some other fields. What role do the differences in teaching loads play?

 

5. Imagine that someone offered you a choice: You could spend 4 years studying at the world’s best university, but you would have to keep your attendance there a secret. Or you could be awarded an official degree from the world’s best university, but you couldn’t actually attend. Which choice do you think would enhance your future earnings more? What does your answer say about the debate over signaling versus human capital in the role of education?