Deck 15: Job Search: External and Internal

Question 1

The longer the expected length of tenure on the job:

A)the higher the acceptance wage and the longer the expected job search duration
B)the higher the acceptance wage and the shorter the expected job search duration
C)the lower the acceptance wage and the longer the expected job search duration
D)the lower the acceptance wage and the shorter the expected job search duration

Answer 1

A

Question 2

If the rate of inflation increases but Sally mistakenly believes it has not,then:

A)both the acceptance wage and the entire distribution will shift to the left,thereby leaving expected search duration unchanged
B)the acceptance wage will shift to the right,thereby reducing excepted search duration
C)the entire distribution will shift to the right,but the acceptance wage will not,thereby reducing expected search duration
D)both the acceptance wage and the entire distribution will shift to the right,thereby leaving expected search duration unchanged

Answer 2

C

Question 3

An increase in unemployment compensation is predicted to:

A)reduce unemployment by raising acceptance wage rates
B)reduce unemployment by reducing acceptance wage rates
C)increase unemployment by reducing acceptance wage rates
D)increase unemployment by raising acceptance wage rates

Answer 3

D

Question 4

Which of the following contributes to a higher unemployment rate of African American youths compared to white youths?

A)Both wage offer distributions and acceptance wages are lower for African American youths
B)The African American wage offer distribution is to the right of the white distribution
C)White youths have a higher acceptance wage than African American youths
D)African American youths have a higher acceptance wage than white youths

Question 5

An unanticipated reduction in the rate of inflation is expected to:

A)reduce the unemployment rate in the short run,but not in the long run
B)reduce the unemployment rate in the both the short run and the long run
C)increase the unemployment rate in the short run,but not in the long run
D)have very little impact on the unemployment rate in either the short run or the long run

Question 6

All else equal,the acceptance wage:

A)is lower for union workers than nonunion workers
B)is lower for African American youths than for white youths
C)falls when unemployment benefits expire
D)falls with increased education

Question 7

If $9.50 is the acceptance wage,what is the probability of Sally finding her next wage offer unacceptable?

A).25
B).30
C).50
D).75

Question 8

A recent tax reform made all unemployment compensation benefits subject to the federal income tax.Since unemployment compensation was tax free prior to the reform,this policy change likely:

A)reduced average job search duration and increased the unemployment rate
B)increased average job search duration and increased the unemployment rate
C)increased acceptance wages and decreased the unemployment rate
D)reduced acceptance wages and decreased the unemployment rate

Question 9

The job search model implies that:

A)the longer the expected job tenure,the lower the acceptance wage
B)the higher the acceptance wage,the shorter the expected search duration
C)expected search duration is longer during a recession
D)if job searchers perceive that a recession is temporary,they will reduce their acceptance wages

Question 10

Which of the following is not typically given as a reason for job search?

A)Workers are heterogeneous
B)Information is imperfect
C)Firms' compensation packages differ from one another
D)Firms are homogeneous

Question 11

The probability of accepting the next wage offer is:

A)higher,the higher is the acceptance wage
B)lower,the lower is the acceptance wage
C)lower,the higher is the acceptance wage
D)higher,the higher is unemployment compensation

Question 12

The acceptance wage is the wage that:

A)equates the expected marginal benefit and expected marginal cost of continued job search
B)minimizes the expected cost of continued job search
C)maximizes the expected benefit of continued job search
D)equates the expected average benefit and expected average cost of continued job search

Question 13

The model of job search given in the text assumes that workers can estimate all but which of the following:

A)the shape of the wage offer distribution
B)the approximate mean of the wage offer distribution
C)the approximate value of any given wage offer
D)the variance of the wage offer distribution

Question 14

Empirical studies of the job search model suggest that:

A)variations in acceptance rates explain most of the variation in unemployment duration
B)higher levels of unemployment benefits have little impact on unemployment duration
C)unemployment duration increases with age
D)longer eligibility limits on unemployment benefits have little impact on unemployment duration

Question 15

If Sally correctly anticipates an increase in the rate of inflation,then:

A)both the acceptance wage and the entire distribution will shift to the left,thereby leaving expected search duration unchanged
B)the acceptance wage will shift to the right,thereby reducing expected search duration
C)the entire distribution will shift to the right,but the acceptance wage will not,thereby reducing expected search duration
D)both the acceptance wage and the entire distribution will shift to the right,thereby leaving expected search duration unchanged

Question 16

A fully anticipated reduction in the rate of inflation is expected to:

A)reduce the unemployment rate in the short run,but not in the long run
B)reduce the unemployment rate in the both the short run and the long run
C)increase the unemployment rate in the short run,but not in the long run
D)have little impact on the unemployment rate in either the short run or the long run

Question 17

If $8.50 is the acceptance wage,what is the probability of Sally finding her next wage offer acceptable?

A).25
B).30
C).50
D).70

Question 18

The major cost of continued job search is:

A)the cost of placing job-wanted advertisements in the newspaper
B)expenses paid to a job-placement agency
C)foregone wages of job offers not accepted
D)transportation expenses of going to job interviews

Question 19

Suppose workers currently receiving unemployment compensation were given a financial reward contingent on finding a job quickly.For example,Washington state at one time provided $562 for workers who became reemployed within 13 weeks.Economic theory suggests that such a "reward" scheme should:

A)reduce job search duration by shifting the wage offer distribution to the left
B)reduce job search duration by decreasing the acceptance wage and intensifying job search
C)reduce job search duration by shifting the wage offer distribution to the right
D)have no effect on job search duration,as the acceptance wage will decrease to offset the effect of the shifting wage offer distribution

Question 20

An unemployed worker will continue a job search provided the:

A)expected benefit of continued search is rising
B)expected cost of continued search is falling
C)last wage offer was below the acceptance wage
D)worker is able to "store" job offers

Question 21

Because workers in internal labor markets are promoted on the basis of seniority:

A)such markets are allocatively inefficient because seniority takes precedence over ability
B)dynamic efficiency is enhanced by removing a disincentive for older workers to pass along skills to younger workers
C)static efficiency is enhanced by allocating the most able workers to each job
D)some other scheme must be introduced,such as tournament pay,to improve efficiency in such markets

Question 22

Internal labor markets benefit senior employees by:

A)forcing the firm to pay all of the expenses associated with general training
B)providing them with greater freedom through the informal work rules associated with such markets
C)providing them with increased protection from job layoff
D)protecting them from pay cuts when they leave the firm for other jobs

Question 23

In an internal labor market,promotions are generally accorded on the basis of:

A)ability
B)work effort
C)seniority
D)age

Question 24

An internal labor market is:

A)conducive to unionization because high levels of specific training endow workers with substantial bargaining power
B)conducive to unionization because unions are highly demanded by workers in firms characterized by high turnover
C)at odds with unionization because unions find it difficult to organize workers in firms characterized by high turnover
D)at odds with unionization because workers and firms with such markets form a symbiotic relationship without the need for unions

Question 25

Internal labor markets benefit workers in that such markets:

A)provide job security and opportunities for advancement
B)allow wage rates to adapt quickly to changing economic conditions
C)provide increased mobility from one firm to another as a method of career advancement
D)pay for workers' general training

Question 26

Suppose a management team assigns 100 points to the job of clerk/typist and 75 points to a job on the loading dock.If the wage paid to a clerk/typist is $8.00 per hour,then the hourly wage paid to a worker on the loading dock would be:

A)$2
B)$6
C)$8
D)$10

Question 27

Internal labor markets may contribute to dynamic efficiency by:

A)paying younger workers more than their marginal revenue products
B)paying older workers more than their marginal revenue products
C)paying older workers less than their marginal revenue products
D)paying each worker a wage equal to her marginal revenue product

Question 28

Internal labor markets are more likely to occur when:

A)principal-agent problems are absent
B)firms expect a high rate of turnover and low hiring costs
C)workers at a particular firm require general training
D)workers at a particular firm require specific training

Question 29

(World of Work 15-2)The recent drop in the proportion of worker holding long-term jobs can be partially explained by:

A)the shift from defined contribution to defined benefit pension systems
B)the shift from services to manufacturing
C)the decline in technological progress and productivity
D)the increase in women's labor force attachment

Question 30

Which one of the following is associated with an internal labor market?

A)Port of entry disconnected from an external labor market
B)Port of entry at the top of the job ladder
C)Port of entry at the bottom of the job ladder
D)The absence of a job hierarchy

Question 31

Which of the following is not a characteristic of an internal labor market?

A)A port of entry,at which workers gain access to the bottom of the job ladder
B)A hierarchy of jobs constituting the job ladder
C)A set of rules and procedures governing the wage structure
D)Equal access by internal and external workers to jobs at all skill levels

Question 32

Wage rates are most likely to be set in accordance with administrative rules and procedures in the:

A)secondary labor market
B)internal labor market
C)external labor market
D)orthodox labor market

Question 33

Internal labor markets are most likely to exist if:

A)workers do not require extensive amounts of firm-specific training
B)there are substantial costs to the employer associated with worker turnover
C)costs of screening and recruiting job applicants are relatively low
D)workers' productivity does not increase with experience

Question 34

Which of the following is not a benefit to employers of an internal labor market?

A)A greater return from investments in specific training
B)A greater return from investment in general training
C)A solution to a principal-agent problem
D)Greater employee identification with the firm's objectives