Occupations X and Y employ persons with the same productivity. Workers in the two occupations work the same number of hours per day when on the job. Employment is stable throughout the year in X, while Y is characterized by seasonal layoffs. How will the hourly wage rate and annual earnings compare in the two occupations?

Question

Quizplus · Accepted Answer

The seasonal layoffs in occupation Y will likely result in lower annual earnings than in occupation X since there will be periods of unemployment. However, to attract workers to occupation Y despite the potential for lower annual earnings, the hourly wage rate will likely be higher than in occupation X. Therefore, the hourly wage rate will be higher in Y, but the annual earnings will likely be higher for X.

Occupations X and Y Employ Persons with the Same Productivity