Expert answer:Undergraduate Economics Homework – Due Sep 29 – 5:

Answer & Explanation:Hi there, I need Questions 1 – 5 in this Assignment  to be completed exactly according to my instructions. Please absolutely no plagiarism from sample solutions provided or anywhere else.Here is the attachment  of the tables and figures that may be needed.Please be able to do this by Sep 29 – 5:00 pm in Microsoft Word, the graphs can be in any format but preferably Microsoft Word.
assignment___1.docx

tables___figures.pdf

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Instructions:
I need questions 1-5 of this assignment answered fully and correctly per instruction. I have provided
the solution manual answers to some of the questions as a guide for you to answer the directions.
Important: Some questions require you to draw graphs and the solution manual answers do not
contain graphs, so you would need to draw them.
Very important: Please come up with the answers in your own words, my professor is very strict
about plagiarism and he has the solution manual to the text, so if some of the answers you provide
sound very similar to the answers in the solution manual in terms of wording, then he would know
that it was copied. So, please write answers that are worded very differently from the solution manual
answers.
Due Date: Sep 29, 2015 – 5:00 pm EST
Figures & Tables Mentioned
Table 3-1 – For Question 2
Figure 6-2 – For Question 4 – II
Figure 6-3 – For Question 4 – II
Figure 6-5 – For Question 4 – III
Figures 6-7 a. and b. – For Question 4 – III
Table 5-1 – For Question 5
Table A-6 & Table A-7 – For Question 5
These tables are attached in the question
Question # 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.
D) Q. Labor market for workers who completed high school only. The workplace becomes more
computerized and technically sophisticated.
Solution Manual Answer:
It is commonly believed that computers and less skilled workers are gross substitutes in production.
Hence, increased computerization is expected to reduce the demand for high school-educated
workers. The demand curve for these workers shifts to the left, causing their equilibrium wage to
fall and the equilibrium number of less-skilled workers hired to fall. (Needs a graph)
E) Q. Labor market for workers who completed college or more. The workplace becomes more
computerized and technically sophisticated.
Solution Manual Answer:
It is commonly believed that computers and less skilled workers are
gross complements in production. Hence, increased computerization is expected to increase the
demand for college-educated workers. The demand curve for these workers shifts to the right
causing their equilibrium wage to rise and the equilibrium number of high-skilled workers hired to
rise. (Needs a graph)
Question # 2
Explain under what conditions it would be rational for a woman who could earn more than her
husband in the labor market to specialize (to some extent) in housework.
Solution Manual Answer:
This could occur if the wife had a comparative advantage in housework. Recall from the text that
specialization depends on comparative (relative) advantage not absolute advantage. Even if a woman
has an absolute advantage at both market work and housework, it is possible that she might still have
a comparative (relative) advantage at doing housework as determined by the ratio of the value of her
time spent in the household to her time spent in the market as compared to the ratio for her husband.
As shown in panel b of Table 3-1, the wife had an absolute advantage in producing home goods and
in the labor market, but since she had a comparative advantage in producing home goods, she
produced all of them (and did some market work as well).
Question # 3
Do you expect that sometime in the future labor force participation rates of women will resume their
increase? Discuss.
Solution Manual Answer:
Women’s labor force participation rates (and those of married women) have stalled at 60 percent
since the early 1990s. Given the length of time of the “stalling,” it is unlikely that we will see a
further marked increase until there is a major change in policy. Policies that would be expected to
spur women’s labor force participation include: changes in tax policy; changes that increase the
availability and affordability of high quality childcare; or expansions of family-friendly policies by
the government or employers that help workers better juggle paid work and family.
Question # 4
Use economic reasoning and indifference curve framework (draw graphs) to
answer the following questions:
a. Question II
b. Question III (part a and b)
c. Question IV
Questions II: Use economic reasoning (economic theory) to explain why the labor force
participation rate for married women and never-married women might differ.*
Solution Manual Answer:
Labor force participation rates for married women and never-married women differ primarily due to
differences in the value of their nonmarket time. First, never-married women are less likely to have
young children, which decreases the value of their nonmarket time. Second, never-married women,
on average, have less nonlabor income (i.e. no spousal income) that also reduces the value of their
nonmarket time.
Indifference curve framework: The indifference curves of women with young children will be more
steeply sloped than those for women without young children, reflecting their higher value of
nonmarket time. They would thus be more likely to choose not to participate in the labor force.
This is illustrated in panel b of Figure 6-2 where the individual with steep indifference curves
chooses not to participate in the labor market while another individual facing the same budget
constraint but with flatter indifference curves (shown in panel a) does choose to participate. Another
factor reducing married women’s participation rates is the increase in nonlabor income that is likely
to accompany marriage (i.e., the income of a spouse is nonlabor income). For women who were not
in the labor force before marriage, this increase in nonlabor income, since it is a pure income effect,
will not induce them to enter the paid labor market (on the contrary, it will make them even less
likely to seek employment than before, by raising the value of nonmarket time). For women who
were working in the labor force before marriage, the increase in nonlabor income may induce them
to exit the market, as illustrated in Figure 6-3. Alternatively, the increase in nonlabor income may
induce some women to cut their hours of work but not exit completely. (Needs graph)
Questions III: Suppose the government were to provide a $2-per-hour subsidy for families with an
employed mother who purchases child care.
Part A Question. Consider a mother with a preschool-age child who is currently not employed.
How would this subsidy affect her decision to work, all else equal?*
Solution Manual Answer:
The introduction of a $2-per-hour subsidy results in a $2 increase in the net hourly wage of all
working mothers who take advantage of the program. Theoretically, child care costs can be thought
of as a tax on the (potential) wages of parents with young children. If a mother (potentially) earns
$W per hour in the labor market and child care costs are $C per hour then the net wage that this
mother faces before the subsidy is equal to WNS = $W – $C. If child care is subsidized by $2-perhour then the hourly tax is reduced by that amount, resulting in a higher net wage of WS = ($W $C) + $2.
Since the mother was not engaged in market work before the introduction of the program, according
to economic theory the net wage she could earn in the market, WNS, was less than her reservation
wage, W*; that is, WNS < W*. However, with the subsidy, her new net wage, WS, may now be larger than her reservation wage W*. This increase in their net wage may induce some women to enter the labor market. Overall, we would expect to see an increase in women’s labor force participation rate from its prior level. Indifference curve framework: This policy change is illustrated in Figure 6-5. Initially the mother is nonemployed (a corner solution). Graphically, the increase in the wage is reflected by a rightward rotation of the budget constraint. Assuming the wage increase is sufficient, as is the case in Figure 6-5, we can see that it may induce previously nonemployed mothers to work some positive number of hours. (Needs graph) Part B Question: Consider a mother with a preschool-age child who is currently employed. How would this subsidy affect the number of hours that she chooses to work (assuming she can vary them), all else equal?* Solution Manual Answer: An increase in the wage rate for an already employed individual has an ambiguous effect on the number of hours worked because the income and substitution effects work in opposite directions. The income effect of a wage increase results in the reduction of hours worked since the increased income results in an increase in the demand for all normal goods, commodities. These can only be produced with more nonmarket time. On the other hand, the substitution effect associated with a wage increase results in a reduction of hours worked since the opportunity cost of nonmarket time rises. The overall effect on hours worked of this wage increase is dependent on which of the two effects dominates: if the substitution effect dominates the income effect work hours are increased; if the income effect dominates the substitution effect work hours are reduced. Indifference curve framework: This policy change is illustrated in Figures 6-7. Initially the mother is employed. Graphically, the increase in the wage is reflected by a rightward rotation of the budget constraint. Assuming the substitution effect dominates the income effect (Figure 6-7 a), her new optimum will be on the new budget constraint at a greater number of hours than before (that is, graphically to the left of the initial optimum). Alternatively, if the income effect dominates the substitution effect (Figure 6-7 b), work hours will be reduced. (Needs graph) Questions IV: Now suppose that the government provides a subsidy of $300 per month for all families with children. Answer part a and part b of question 3 again under this scenario. How would your answers to question 3 change? Explain fully.* (Please draw graphs) Solution Manual Answer: A $300 a month subsidy to all families with children increases the nonlabor income of families with children and hence would change the answers to question 3 above. a) All else equal, an increase in nonlabor income will not induce nonemployed individuals, mothers or others, to enter the paid labor market. This is because a change in nonwage income results in a pure income effect. In this case, an increase in nonwage income expands mothers’ consumption possibilities, resulting in increased demand for all commodities, these can only be produced with greater infusions of nonmarket time. Indifference curve framework: Initially the mother is nonemployed (a corner solution). This policy shifts the budget constraint out parallel to the initial one. This type of budget constraint shift can be seen in Figure 6-3. The new solution will be at the corner of the new (higher) budget constraint (this new optimum is not specifically illustrated in Figure 6-3). (Needs graph) b) All else equal, an increase in nonlabor income will induce an already employed mother to reduce her hours of work. In contrast to 3(b) (where the wage changed), a change in nonlabor income produces only an income effect and not both an income and substitution effect. Hence, the expanding consumption possibilities created by an increase in nonlabor income will induce mothers to increase their demand for all commodities and hence for nonmarket time, which induces them to reduce their time in the labor market. Indifference curve framework: As shown in Figure 6-3, initially a mother may spend 5 hours per day in the labor market (see point D). This policy may lead the mother to completely exit the labor force (as depicted in Figure 6-3) and shift her optimum from point D to point B’. Another possibility (not shown in Figure 6-3) is that it may cause her to reduce hours worked but not to zero (as reflected by a tangency along the new budget constraint, for instance at 3 hours of work). (Needs graph) Question # 5 Visit the home page of the U.S. Bureau of Labor Statistics at http://www.bls.gov/ a) Update the labor force participation rate for men and women for the years 2008 – 2013. (Compare to Table 5-1 for 7th Edition). Comment on it. b) Find the labor force participation rate for men and women for the year 2013 (i) across race (ii) across educational attainment c) Use latest American Time Use Survey data (on BLS) and comment on gender differences on average time spent on various household activities for married mothers and fathers (varied over employment type). (Hint use Tables A-6 and A-7) ... Purchase answer to see full attachment

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