CBE Labor Economics 4

Question 1

The natural rate of unemployment is defined as the rate of unemployment that:

Accepted Answer

Prevails when the labor market is in long-run equilibrium with no cyclical unemployment

Answer

Exists only during recessions

Answer

Is zero in a healthy economy

Answer

Equals the structural unemployment rate minus frictional unemployment

Question 2

A union wage premium refers to:

Accepted Answer

The difference between union members' wages and nonunion wages for comparable workers

Answer

The extra pay unions receive from government subsidies

Answer

Wages above the minimum wage that unions negotiate

Answer

The premium paid to union leaders for collective bargaining

Question 3

According to the job search model, a higher unemployment insurance benefit is expected to:

Accepted Answer

Lengthen average unemployment spells by raising the reservation wage

Answer

Shorten average unemployment spells by increasing search intensity

Answer

Have no effect on unemployment duration

Answer

Reduce frictional unemployment by matching workers to firms faster

Question 4

Which labor market outcome is most consistent with efficiency wage theory?

Accepted Answer

Wages set above market-clearing levels to reduce shirking and turnover

Answer

Wages equal to workers' marginal revenue products

Answer

Wages determined by collective bargaining

Answer

Wages reflecting industry-wide skill premiums

Question 5

The Oaxaca-Blinder decomposition is used in labor economics to:

Accepted Answer

Decompose wage gaps into explained and unexplained components

Answer

Measure the elasticity of labor supply across industries

Answer

Estimate the union wage premium from panel data

Answer

Calculate the optimal minimum wage for a given labor market

Question 6

In the context of labor economics, 'derived demand' means that demand for labor:

Accepted Answer

Depends on the demand for the goods and services that labor helps produce

Answer

Is derived from government regulations on minimum wages

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Comes from workers' desire to earn income

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Is derived from competitive pressures among employers

Question 7

When a firm provides general training to workers, economic theory predicts that:

Accepted Answer

Workers bear the full cost of training through lower wages during training

Answer

The firm bears the full cost of training and captures all the returns

Answer

The government subsidizes the training cost entirely

Answer

Training costs are split equally between the firm and the government