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Which of the Following Regarding Roy's Model of Earning Determination

Question 3

Multiple Choice

Which of the following regarding Roy's model of earning determination is NOT correct?


A) Wages are perfectly equalized across sectors, as workers with different skills choose the sector in which they earn more than in any other job.
B) People choose their occupation (or type of job or employer) on the basis of comparative advantage.
C) Comparative advantage results in a selection bias since workers with different sets of observed and unobserved skills tend to sort themselves into different jobs or occupations.
D) A market clearing equilibrium holds because no worker would prefer to switch to a different kind of job in equilibrium.
E) Most workers earn rents in equilibrium in the sense that the wage in the job they choose is higher than what they would get in other jobs.

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