Assume that the market-clearing wages are $10 per hour in a safe job and $18 per hour in a risky job. Then, at the completion of a war, many ex-soldiers who enjoy risky ventures enter the labor market. Which of the following is not a likely outcome of this change?
A) Many firms that currently offer risky jobs will begin offering safe jobs.
B) The fraction of people working safe jobs will decrease.
C) The wage associated with risky jobs will decrease.
D) The number of people working risky jobs will increase.
E) The wage differential will decrease.
Correct Answer:
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Q2: The equilibrium hedonic wage function is most
Q3: The market-clearing wage differential between a safe
Q4: The supply curve of labor to risky
Q5: Under normal circumstances, the equilibrium compensation wage
Q6: Abby's reservation price for working in a
Q7: A hedonic wage function could be applied
Q8: A standard hedonic wage function might show
Q9: The correlation between wages and the probability
Q10: In the standard theory of compensating differentials,
Q11: Risk-averse workers
A) have shallow wage-risk indifference curves
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