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Question;1. Suppose that current workers? compensation policy (A) provides;employees injured on the job a payment of $X each year whether they work;or not. Suppose the government were to implement a new program (B) in;which those who did not work at all got ? $X per year but those who did;work got ? $X plus workers? compensation of 50 cents for every hour;worked. So, in other words, the constraint under policy A is the fixed;payment plus the wage rate [($X) + W], and under policy B it is [.5($X) +;1.5W].Graphically depict the wage constraint for (1) no policy, (2) policy A, and (3) policy B.What impact does policy A have on labor supply compared to no policy at all?What would be the change in work incentives associated with policy B compared to policy A?The;graph associated with this problem should be large and on a separate;sheet of paper. Be sure to calibrate each axis very precisely.2.;There is a proposal to increase the federal minimum wage to $10.10. If;16 hours per day are available for work and leisure, graphically;represent the daily wage constraint for a worker who was earning the;minimum wage rate of $7.25 and the new budget constraint after the;increase.Discuss the theoretical impact of the proposed higher minimum wage on labor supply.More;specifically, under the current $7.25/hour minimum wage suppose Joe?s;desired hours of work is 3 hours per day, and for Bill it is 7 hours per;day. Compare and discuss the relative magnitudes of the substitution;and income effects of the higher minimum wage for workers like Joe;versus workers like Bill.3. Suppose the U.S. passes a law that;cuts the standard work day from 8 to 7 hours. Suppose that overtime;(hours worked per day beyond the ?standard? workday) is paid at 50%;above the normal wage rate (1.5W) under both definitions of the standard;workday. Answer the following questions related to the work incentives;facing workers:Graph the old budget constraint (in;leisure/income space), showing the overtime premium after 8 hours of;work per day. Assume a maximum work day of 16 hours as we have been;doing in class, and be precise about where on the constraint overtime;pay kicks in.On your graph in (a), draw in the new budget constraint that sets the standard day at 7 hours.Use;your diagrams in (a) and (b) to analyze the change in work incentives;facing workers as a result of this new law changing the standard work;day. Be sure to consider different segments of the new vs. old;constraints.

 

Paper#57449 | Written in 18-Jul-2015

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