Deck 6: On-The-Job Training

Question 1

Specific training is:

A) training that raises a worker's productivity at all firms.
B) training that is only useful for one firm.
C) training that always occurs on site.
D) training that is always planned and off site.
E) training that is always gained through information conversations.

Answer 1

B

Question 2

Which of the following is an example of informal training?

A) A worker chooses to take a course at a local community college.
B) An employer requires all workers to take an on-line course.
C) Over lunch,a senior employee explains a difficult concept to a new worker.
D) Through experience,a worker learns a more efficient way to do his job.
E) The supervisor schedules a meeting with a worker to discuss better ways to perform a job.

Answer 2

C

Question 3

Formal training is training that

A) raises a worker's productivity at all firms.
B) is only useful at one firm.
C) is only useful for one industry.
D) is planned,such as a training seminar.
E) is gained through information conversations.

Answer 3

D

Question 4

Which of the following is an industry-specific skill?

A) Carl takes a course on using Microsoft Office,a commonly used operating system.
B) Sam trains Craig on how to use a new machine in the factory.
C) Mike obtains an engineering degree to become an engineer.
D) Kara talks with her boss about the possible uses of a new word processor.
E) Shelly exercises to stay healthy.

Question 5

If the training is general,who will pay for the training?

A) The individual will pay the full $60.
B) The firm will pay the full $60.
C) The firm will pay $40 and the individual will pay $20.
D) The firm will pay $20 and the individual will pay $40.
E) The individual will not receive training because the costs are greater than the benefits.

Question 6

If there are turnover costs,for specific training

A) the firm will bear the full cost of the training.
B) the worker will bear the full cost of the training.
C) the worker receives less than his MRP early in his career.
D) wages decrease based on the costs of the investment.
E) the wage will be higher in order to avoid turnover of the workers.

Question 7

Which of the following is an example of learning-by-doing?

A) An individual who wants to become an account studies for the CPA exam.
B) A parent helps a child with his math homework.
C) A student takes an engineering course in order to obtain an engineering degree.
D) A prelaw student obtains a summer internship at a law firm and learns how to write a brief.
E) An adult goes to the doctor to make sure she is ready to work after surgery.

Question 8

Suppose a worker can earn $25,000.He obtains specific training,raising his value by $10,000.If the worker can negotiate after the training,which of the following may be his wage?

A) $15,000
B) $20,000
C) $25,000
D) $30,000
E) $40,000

Question 9

Which of the following is not true about specific training?

A) The wage is constant for both the incumbent firm and the spot market firm.
B) The initial wage of an individual has no relationship to the costs of training.
C) In the early stages of his career,a worker earns his MRP.
D) Late in her career,a worker still earns his MRP.
E) The training causes the MRP of the worker to increase for only the incumbent firm.

Question 10

General training is:

A) training that raises a worker's productivity at all firms.
B) training that is only useful for one firm.
C) training that always occurs on site.
D) training that is always planned and off site.
E) training that is always gained through information conversations.

Question 11

What problem does turnover create for firm specific training?

A) Human capital is destroyed if the worker quits the firm.
B) The worker pays more for human capital than is efficient.
C) The workers are underpaid to correct a market inefficiency.
D) Firms underinvest in human capital.
E) Turnover does not cause a problem because of contracts.

Question 12

Which of the following is not true about general training?

A) The greater the costs of training,the lower the initial wage.
B) Training causes the worker's MRP to increase equally for the incumbent firm,as well as spot market firms.
C) The worker always receives his MRP.
D) For the first few years,workers are paid less than their MRP.
E) After training is complete,the workers receive their MRP.

Question 13

For training,a worker's starting wage depends on the costs of training.For training,a worker's wage does not depend on the costs of training.

A) general,specific
B) general,general
C) specific,general
D) specific,specific
E) informal,formal

Question 14

For training,workers receive their MRPs during the early stages of their careers,but for training,they receive less than their MRPs during the latter stages.

A) general,specific
B) general,general
C) specific,general
D) specific,specific
E) informal,formal

Question 15

Suppose labor is perfectly competitive and there are only two periods.For which values of the interest rate,r,costs of training,i,and value added by training,V,is the training opportunity inefficient?

A) i = $50,V = $150,r = 10%
B) i = $40,V = $100,r = 10%
C) i = $60,V = $125,r = 5%
D) i = $90,V = $125,r = 5%
E) i = $90,V = $100,r = 15%

Question 16

If the training is firm specific,who will pay for the training?

A) The individual will pay the full $60.
B) The firm will pay the full $60.
C) The firm will pay $40 and the individual will pay $20.
D) The firm will pay $20 and the individual will pay $40.
E) The individual will not receive training because the costs are greater than the benefits.

Question 17

Students in high school are generally paid the minimum wage.What is one explanation for this?

A) Employers discriminate against young workers.
B) High school students are lazy.
C) Individuals who work while in high school have a very low MRP.
D) High school students have high turnover rates,so firms invest less in their training.
E) Young individuals are not qualified to effectively negotiate their wages.

Question 18

A worker's wage increases over the course of her career for which type of training?

A) formal
B) informal
C) general
D) specific
E) on-site

Question 19

What is the hold up problem?

A) The ability of a worker to negotiate a wage increase causes deadweight loss.
B) Sunk investments in firm specific training are vulnerable to exploitation by workers.
C) Sunk investments in general training are vulnerable to exploitation by firms.
D) Workers do not spend enough obtaining general human capital.
E) Firms overinvest in firm specific human capital.

Question 20

The cost sharing arrangement is when:

A) a worker initially pays for training and then receives higher wages.
B) a firm initially pays for training and then the worker receives higher wages.
C) a worker initially pays for training and then receives lower wages.
D) a firm initially pays for training and then the worker receives lower wages.
E) firms cover the entire costs of training and a worker receives his MRP.

Question 21

The hold up problem arises

A) if firms invest in specific capital and so have incurred a sunk cost which is vulnerable to expropriation.
B) if firms invest in general capital and so have incurred a sunk cost which is vulnerable to expropriation.
C) if firms invest in specific capital and so workers have an incentive to leave the firm and waste the investment.
D) if firms invest in general capital and so workers have an incentive to leave the firm and waste the investment.
E) if specific investments made by the firm will create inefficiencies.

Question 22

Fewer women are taking time off to raise their children.What does this imply about their labor market activities?

A) Women will acquire less on-the-job training and earn less over their lifetime.
B) Women will acquire less on-the-job training and earn more their lifetime.
C) Women will acquire less on-the-job training and earn the same earnings over their lifetime.
D) Women will acquire more on-the-job training and earn less over their lifetime.
E) Women will acquire more on-the-job training and earn more over their lifetime.

Question 23

Which of the following is an example of general training?

A) A worker takes a course on how to use Excel,a commonly used program.
B) A mechanical engineer takes an advanced graduate course in engineering.
C) Two workers have a discussion about how to best use a new machine in the office.
D) An accounting student studies for the CPA.
E) A college student interested in medicine volunteers at a hospital.

Question 24

Suppose a worker receives firm specific training,but his wages do not increase afterward.Why?

A) Specific training has no value to the firm.
B) Specific training does not increase the worker's productivity.
C) Specific training does not increase the leverage a worker can use to raise his wage.
D) Specific training is inefficient.
E) The worker receives the benefit by the employer paying for the costs of training.

Question 25

In a model with turnover,when a worker quits the value of specific training is lost.This could be avoided if

A) the firm pays for all training costs.
B) the firm forces the worker to always receive the same wage.
C) the firm refuses to pay for any type of training other than general training.
D) the firm pays the worker more in the second period.
E) the firm pays the worker less in the second period.

Question 26

If training is efficient,then it will be carried out and pay for investments.

A) workers,specific
B) workers,general
C) firms,formal
D) firms,informal
E) firms,general

Question 27

If there is turnover in the market,

A) a firm will pay the full cost of specific training.
B) a worker will pay the full cost of specific training.
C) a worker and firm will share the costs of specific training.
D) a firm will pay the full cost of general training.
E) a worker will pay the full cost of general training.

Question 28

Which type of investment results in a steep age-earnings profile?

A) on-the-job training
B) formal training
C) informal training
D) general training
E) specific training

Question 29

An individual's age-earnings profile decreases over his lifetime.Which of the following would explain this phenomenon?

A) On-the-job training stops completely after the first few years of work.
B) On-the-job training declines over an individual's career.
C) Firms discriminate against older workers and pay them less since they are closer to retirement.
D) The human capital he acquires over all those years of employment decreases his productivity.
E) Workers cut back on hours to spend more time at home.

Question 30

Learning by doing

A) requires a worker to take a course.
B) occurs over informal conversations.
C) is only applicable to one specific type of job.
D) is always general training.
E) may be obtained as a by-product of the production process.