Chapter 15 - Income, inequality, and poverty

As the mayor of a town, Wang has the power to repeal workplace safety laws. For construction workers building the local school, the repeal of all workplace safety laws would

increase their wages because of more severe positive compensating differentials.

Which theory would lead someone to be suspicious of a job advertisement that reads: "Help Wanted! Fun and exciting job with excellent pay"?

compensating differentials

Which theory suggests that workers with more education earn higher wages because the extra schooling has given them additional skills for the job?

human capital

Comparing individuals' wages, differences in their levels of education and training

can partially explain why some individuals earn higher wages than others.

Some employers are willing to provide job training for workers. However, an employer might require the worker to pay for the training when the training is

a general skill that could be used in any job for any employer.

Some employers are willing to provide job training for workers. The employer might be willing to pay for the training when

the training is specific to the employer.

Lucinda has five years of work experience and a college degree, and Tobias has only one year of work experience and did not graduate from college. The ________ model would predict that Lucinda should earn a higher wage than Tobias.

human capital

Miguel earns more money than April because Miguel went to college and April did not. Which economic theory justifies this statement?

human capital

Miguel earns more money than April because Miguel went to college and April did not. Which economic theory justifies this statement?

human capital

In recent decades, more women than men have received undergraduate degrees. Consequently, women's wages will ________ according to ________ theory.

increase; human capital

The cost of education at an Ivy League university is more than $50,000 per year. At a community college, the cost of education is only a few thousand dollars per year. Which economic theory could justify enrolling in an Ivy League school?

signal

Marta quits her high-paying job in snowy, cold Fargo to accept a lower-paying job in San Diego where she will enjoy a more pleasant climate. She is willing to accept the lower pay because the benefit of enjoying the nice weather act as ________.

compensating differential

Mateo is the economic development director of a small town in a rural area. What would be his biggest challenge in encouraging economic development in terms of location?

If the location is deemed undesirable by employees, employers will have to pay higher wages.

The occupational crowding model of discrimination predicts

that men's wages will fall and women's wages will rise when certain jobs are no longer dominated by men.

Which statement best represents the phenomenon of occupational crowding?

Women are overrepresented in receptionist jobs and underrepresented in software development jobs.

Which theory would suggest that a Nobel Prize-winning economist should earn significantly more than other economists?

winner-take-all

Which theory best explains why a major league baseball player earns so much more than a minor league baseball player?

winner-take-aall

Which theory can explain why a CEO might earn so much more than other managers with similar experience and education at the same company?

winner-take-all

Why is it unlikely that income inequality could ever be eliminated?

Workers will always have different skills, abilities, and productivities.

How does the level of income inequality in the United States compare to that in other countries?

There is greater income inequality in the United States when compared to other developed countries, and less in the United States when compared to less-developed countries.