Labor Market for Math and Science Teachers - Assignment Example

Lecturer Paper Instructions: Type all of your written answers. You can fill in the graphs by hand. Please remember to staple beforecoming to class. 1. Using a graph, show how each of the following labor markets (assumed to be competitive and initially in equilibrium) is affected by the following changes. Clearly explain your reasoning. a. Labor market for math and science teachers. Wages available in private industries utilizing these skills rise. When there are available wages, it will translate to an increase in the demand for science and math teachers. Therefore the wages will increase from the equilibrium level to point wage rate 1. b. Labor market for university professors. College enrollments expand. When college enrolments expand, them more lecturers will be required to teach students. As shown in the diagram the supply for lecturers increases. (Palokangas 109) c. Labor market for low-skilled workers. The 1996 federal welfare legislation requires that a much larger fraction of welfare recipients work than in the past. The demand for low skilled workers is not usually competitive as compared to skilled workers. Employers never pay high wages to low skilled workers. If they have to give them high salaries then the economical interpretation will be that few will be employed. The real wages paid is inversely proportionate to the number of labour that is employed. d. Labor market for workers who completed high school only. The workplace becomes more computerized and technically sophisticated. Since those who completed high school have not done any technical training, their labour demand will be low as compared to the trained professionals. Since the operations of the firm have been computerized with technically sophisticated machines, there is need for an advanced training to meet the company demands. The curve is downward sloping. This means that as the operations of the company go technical, then the employment of high school students come down. The graph therefore shows an inverse relationship between company operations and the technological advancement in the company. e. Labor market for workers who completed college or more. The workplace becomes more computerized and technically sophisticated. The demand for college students in a technically sophisticated company will be high s compared to that of high school students. The graph as curved shows that in the beginning of operations the company will need mode of demand for labour as it increases its operation. Then at some level, there will be a substitution effect whereby a few of non sophisticated labour will be required to offer non skilled support into the company. (Palokangas 92) 2. Jason and Jennifer are married. If Jason works in the labor market, he can earn a wage of $15 per hour, while Jennifer can earn a wage of $10 per hour. a. Who has an absolute advantage in the labor market? How do you know? Jennifer has an absolute advantage in the labour market. This is because industries will be interested in working with Jennifer as her wage demand is low as compared to that of Jason. In a given day, she can work more due to preference she will be getting from the clients. b. Suppose we want to know who has a comparative advantage in the labor market. What specific information do we need to know? Discuss. There are a myriad of information that will be required when we want to know an individual with a comparative advantage. Some of these include Wage rates-One who demands reasonable wage rates will always get comparative advantage as compared to another who charges more Technical knowhow- An individual with a technical training will get preference to an individual without any level of training Sexual orientation- There are works which will require physical strength which females cannot handle. Therefore the preference will be given to their male counterparts. Let Zm denote total output of single men, Zf total output of single women, Zmf total output of married households, Sm wife’s share of Zmf and Sm husband’s share of Zmf. Draw a supply and demand graph with number of women on the x axis and Sf on the y axis. Label both axes. Denote the equilibrium number of women married N* and the equilibrium share of household output given to women Sf*. Explain why the demand curve for wives is downward sloping and the supply curve of wives willing to marry upward sloping. The demand curve for wives is downward sloping since the equilibrium output given to women as compared to that offered to women who are married. Therefore more women will be willing to marry. In the last fifty years, average female wages have increased both because their qualifications have improved and because of affirmative action laws. Assume this has given women freedom to enjoy their ‘single’ lives thus increasing Zf. Also assume for simplicity that this had no net effect on men’s preferences for marriage. On the graph you drew in part a, show what happens to equilibrium Sf and N when female wages increase. Explain your results. When there is freedom the equilibrium for women will shift upwards as shown in the diagram. A new equilibrium will be set since more women will be willing to stay on their own and therefore deriving more output from their work. Using the following productivity rates per hour of work, answer the questions below. Market Work Nonmarket work Jack 5 units of output 2 units of output Jill 3 units of output 6 units of output Graph the individual production possibility frontiers (with market work on the y axis and nonmarket work on the x axis) assuming that each individual only works 10 hours. Hint: You may want to copy-paste the grid below onto your answer sheet. Each line can represent 10 units. Graph their joint/combined production possibility frontier on the same graph used in part (a). Why is the production possibility frontier relatively flat for low levels of nonmarket work but steep for high levels of nonmarket work? This is because the non market work does not have economical and financial value attached to it. Assuming Jack and Jill divide their output evenly. Graph the joint production possibility frontier on a per capita basis. As shown in the graph On the graph, show the combinations of market and nonmarket goods which can be consumed by specializing and trading which could not have been consumed by either Jack or Jill if they were working by themselves. The combination of market and non market gods which can be used by either Jack or Jill are 3 for market work goods and 2 for market goods. If Jack had no desire for nonmarket goods, would there be any incentive to marry, specialize, and trade? Why? It will not make sense for Jack to marry, specialize or trade. Since Jack is not interested in non market goods which from the data are what Jill has specialized in. Either marrying or specializing will not add any economical value to him. Trading will not work well since Jill is lso not much interested in market goods which Jack produces. Now assume that Jack has more power in the relationship and instead of splitting output evenly, he consumes 75 percent of the joint output while Jill only consumes 25 percent. On separate graphs for Jack and Jill (copy-paste the grid below twice), graph the individual production possibility frontier and the per capita joint production possibility frontier for Jack and Jill. Would Jill still have as much of an incentive to marry Jack if specialization and exchange were her only motivation behind marriage? For maximum satisfaction, he will still have an incentive to marry so as to achieve full satisfaction. What are some other possible economic incentives for their marriage? Name and describe at least three. Improve satisfaction- Through marriage they will be in a position to ensure that they achieve full satisfaction. Comparative cost- The cost will be reduced as Jack will only be producing a specific good. (Palokangas 7) Increase in social welfare- this will be as a result of increased output In a very well-regarded study, Yale Professor T Paul Shultz studied fertility in Sweden in the later 1800’s and early 1900’s. In Sweden, men tended to work in the grain industries, while women tended to work in the dairy industry. Assume that women in Sweden had a comparative advantage in home production while men had a comparative advantage in market work. Also assume that wages in the dairy industry were lower than wages in the grain industry. Sketch a joint/combined production possibility frontier for a typical Swedish couple. The assumption applied is that men taking 10 units for men and 5.5 for women in Sweden. Women During this period, globalization (competition from the US) decreased wages in the grain industry without affecting wages in the dairy industry. Assuming that productivities in the home sector stayed the same and that women retained their comparative advantage in home production, draw the new joint production possibility frontier. Women Discuss how these economic changes should affect fertility and why. Draw indifference curves in your graph from part B to help explain your answer. (HINT: Children can be thought of as mostly a ‘home good’ since they require quite a bit of time.) The above economic factors improve the productivity and urge to grow. Specialization improves the quality that is being produced within the economic arena. Specialization will reduce the application of children in production. This is because it will only be possible to produce more of economical goods. Work cited Palokangas, Tapio, Labour unions, public policy and economic growth, Cambridge University Press; Cambridge, 2000 Read More