CEA Labor Economics and Human Capital 3

Question 1

Dual labor market theory divides the economy's labor market into:

Accepted Answer

A primary segment with stable, high-wage jobs and a secondary segment with unstable, low-wage jobs

Answer

Public sector employment and private sector employment

Answer

Skilled labor and unskilled labor markets with flexible wage adjustment

Answer

Formal economy employment and informal economy employment

Question 2

Job search theory, as developed by Stigler and Mortensen, predicts that unemployed workers will:

Accepted Answer

Set a reservation wage and continue searching until they receive an offer meeting that threshold

Answer

Accept the very first job offer received to minimize unemployment duration

Answer

Rely entirely on government employment services rather than conducting independent search

Answer

Match with employers randomly without engaging in strategic wage comparison

Question 3

The Beveridge curve illustrates the relationship between:

Accepted Answer

The unemployment rate and the job vacancy rate across the business cycle

Answer

Wages and labor productivity across different industries

Answer

Years of education and lifetime earnings for individual workers

Answer

Union membership rates and wage growth over time

Question 4

Implicit contract theory in labor economics explains wage rigidity by arguing that:

Accepted Answer

Risk-averse workers accept stable wages as implicit insurance from employers who absorb income variation

Answer

Wages fluctuate with the business cycle to continuously clear the labor market

Answer

Explicit union contracts prevent wage adjustment outside of formal bargaining periods

Answer

Government stabilization policies guarantee employment levels and fix wages during recessions

Question 5

In labor economics, 'labor hoarding' refers to the practice whereby:

Accepted Answer

Firms retain excess workers during economic downturns to avoid dismissal and rehiring costs

Answer

Unions accumulate large membership rolls during economic expansions

Answer

Workers hold multiple part-time jobs simultaneously to increase income security

Answer

Employers stockpile job applications and résumés for anticipated future hiring needs

Question 6

A leftward shift in the labor supply curve in a competitive market most likely indicates:

Accepted Answer

A decrease in workforce participation due to factors such as an aging population or higher non-labor income

Answer

An increase in immigration that expands the available workforce

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A rise in real wages that induces more workers to enter the labor market

Answer

An increase in labor demand that bids up wages and increases employment

Question 7

The concept of 'statistical discrimination' in labor markets refers to:

Accepted Answer

Employers using observable group characteristics as proxies for unobservable individual productivity, leading to group-based wage differences

Answer

Intentional prejudice by employers who dislike hiring workers from certain groups

Answer

Government agencies using employment statistics to enforce equal pay legislation

Answer

Workers selecting occupations based on average wages reported in official labor statistics