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ECON3029 WORKSHEET November 1 – 6 2021. Question 1 [20 marks] A justification for job training programs is that they improve worker productivity. Suppose that you are asked to evaluate whether more job training makes workers more productive. However, rather than having data on individual workers you can access data on manufacturing firms in Ohio. In particular, for each firm, you have information on hours of job training per worker (training) and number of non-defective items produced per worker hour (output). (a) Carefully state the ceteris paribus thought experiment underlying this policy question. [5 marks] (b) Does it seem likely that a firm decision to train its workers will be independent of worker characteristics? [4 marks] (c) List 3 measurable and unmeasurable worker characteristics? [6 marks] (d) Name a factor other than worker characteristics that can affect workers’ productivity. [1 marks] (e) If you find a positive correlation between output and training, would you convincingly established that job training makes workers more productive? Explain [4 marks] Question 2 [20 marks] Examine the table below which contains some labour market data for the Bahamas (2009 – 2014) and answer the questions which follow. Select Labour Market Information for the Bahamas, 2009-2014 Sources: 1. Except the minimum wage, variables are created with data from Inter-American Development Bank. Labor Markets Division. (2016). Database of Labor Markets and Social Security Information System (SIMS). Washington, DC: Inter-American Development Bank. Numbers for Development. Available from: https://mydata.iadb.org/d/v2c9-36h7 2. Minimum wage information is ascertained from: Bahamas – Minimum wages. Available from: http://www.countryeconomy.com/national-minimum-wage/bahamas United Nations. (n.d.). Purchasing power parities (PPP) conversion factor, local currency unit to international Year Average monetary labor income for workers in their main occupation in the last month, PPP (constant 2011 international $) Average monetary labor income for formal workers in their main occupation in the last month, PPP (constant 2011 international $) Average monetary labor income for informal workers in their main occupation in the last month, PPP (constant 2011 international $) Unemploymen t Rate Monthly Minimum Wage, PPP (constant 2011 international $) 2009 2,069.32 1,774.19 3,450.47 13% 770 2011 1,992.92 1,836.31 2,663.86 15% 770 2012 1,818.44 14% 770 2013 1,614.73 1,604.85 1,652.05 14% 770 2014 1,674.15 1,593.31 2,055.34 14% 770 https://mydata.iadb.org/d/v2c9-36h7 http://www.countryeconomy.com/national-minimum-wage/bahamas ECON3029 WORKSHEET November 1 – 6 2021. dollar. Millennium Development Goals Database. United Nations Statistics Division. Available from: http://data.un.org/Data.aspx?d=MDG&f=seriesRowID%3a699 (a) Given the theorized relationship between the unemployment rate and the minimum wage in the static model of the labour market, how should the unemployment rate respond to a constant minimum wage? [4 marks] (b) How does this compare to the data shown in the table? Explain and support your reasons with references in text and in the reference list according to APA conventions. [6 marks] (c) Note that there is a difference in income depending on employment in the formal sector and that these incomes are different from the minimum wage. Using the theory of compensating wage differentials and other reasons, explain why wages might vary for workers in the formal sector versus the informal sector. What can you conclude about the need for further research in this area?[10 marks] Rubric Questions 1 & 2 Criteria Excellent Good Satisfactory Poor Integration of knowledge & content Answers are comprehensive, accurate and complete. Key ideas are clearly stated, explained, and well supported. Answers are accurate and complete. Key points are stated and supported. Answers are not comprehensive or completely stated. Key points are addressed, but not well supported. Answers are partial or incomplete. Key points are not clear. Question not adequately answered. Organization Well organized, coherently developed, and easy to follow Organization is mostly clear and easy to follow. Inadequate organization or development. Structure of the answer is not easy to follow. Organization and structure detract from the answer Writing Conventions (Spelling, punctuation, grammar, and complete sentences.) Displays no errors in spelling, punctuation, grammar, and sentence structure. Displays one to three errors in spelling, punctuation, grammar, and sentence structure. Displays three to five errors in spelling, punctuation, grammar, and sentence structure. Displays over five errors in spelling, punctuation, grammar, and sentence structure. Question 3 [20 marks] Let us suppose that labour demand and labour supply are represented by the equations: Demand: LD = 10 - 0.5W Supply: LS = 0.5W. a. Find the equilibrium wage and employment level. [7 marks] b. Graph