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Labor Supply and Participation Analysis

This document contains questions and problems about labor supply and labor force participation rates. Question 1 asks about how wages affect labor force participation. Question 2 discusses factors that influenced the rise in women's labor force participation after WWII, such as changes in the types of jobs available and women's education levels. Question 3 considers whether a married woman works less if her husband gets a raise or more if she gets a raise. Problem 1 asks about the effect of a shorter commute on work hours if leisure and income are normal goods. Problem 2 asks to draw daily budget constraints before and after a minimum wage increase. Problem 3 asks to draw the daily budget constraint for someone paid regular wages for the first 8 hours and time-and-a-half for

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172 views1 page

Labor Supply and Participation Analysis

This document contains questions and problems about labor supply and labor force participation rates. Question 1 asks about how wages affect labor force participation. Question 2 discusses factors that influenced the rise in women's labor force participation after WWII, such as changes in the types of jobs available and women's education levels. Question 3 considers whether a married woman works less if her husband gets a raise or more if she gets a raise. Problem 1 asks about the effect of a shorter commute on work hours if leisure and income are normal goods. Problem 2 asks to draw daily budget constraints before and after a minimum wage increase. Problem 3 asks to draw the daily budget constraint for someone paid regular wages for the first 8 hours and time-and-a-half for

Uploaded by

Oona Niall
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem Set 4.

Labor Supply in the Economy

Question 1
Evaluate the following quote:
“Higher take-home wages for any group should increase the labor force participation rate for that group.”

Question 2
A study of the labor force participation rates of women in the post-World War II period noted:
Over the long run women have joined the paid labor force because of a series of changes affecting
the nature of work. Primary among these was the rise of the clerical and professional sectors, the
increased education of women, labor saving advances in households, declining fertility rates, and
increased urbanization.
Relate each of these factors to the household production model of labor supply

Question 3

Is the following statement true, false, or uncertain? Why?


“If a married woman’s husband gets a raise, she tends to work less, but if she gets a raise, she tends to
work more.”

Problem 1

Nina is able to select her weekly work hours. When a new bridge opens up, it cuts one hour off Nina’s
commute to work. If both leisure and income are normal goods, what is the effect of the shorter commute
on Nina’s work time?

Problem 2
The federal minimum wage was increased on July 24, 2007 to $5.85 from $5.15. If 16 hours per day are
available for work and leisure, draw the daily budget constraint for a worker who was earning the
minimum wage rate of $5.15 and the new budget constraint after the increase.

Problem 3
Stella can work up to 16 hours per day at her job. Her wage rate is $8.00 per hour for the first 8 hours. If
she works more than 8 hours, her employer pays “time and a half.” Draw Stella’s daily budget constraint.

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