Prof. Bryan Caplan

bcaplan@gmu.edu

http://www.gmu.edu/departments/economics/bcaplan

Econ 321

Fall, 2000

 

I.                     Suppose there are equal quantities of two kinds of labor: skilled and unskilled.  Demand for skilled labor is much higher: the market wage of skilled workers is $20, the market wage of unskilled is $3.  Diagram the effect of a $7 minimum wage on both markets.

II.                   In France, unemployment is higher but real wages are lower than in the U.S.  Draw Aggregate Labor Demand and Aggregate Labor Supply for both countries showing how this is possible.

III.                  Suppose that the nominal wage in 2000 is $6.00/hour; in 2005 it rises to $7.25/hour.  Fill in the following table for the real minimum wage (in 2000 $'s) for 2000-2007.  Then graph the real minimum wage over time.

Year	Inflation	Real Minimum Wage
2000	3%	$6.00
2001	4%
2002	5%
2003	10%
2004	3%
2005	0%
2006	3%
2007	5%

IV.               Diagram the effect of (a) Abolishing the minimum wage and (b) Raising unemployment benefits at the same time.

V.                 Economists have occasionally argued that unionized workers are happier and therefore more productive.  Assuming this claim is true, draw diagrams to illustrate the implications for the product and the labor market.

VI.               The Family Leave Act, passed in Clinton's first term in office, requires employers to give workers three months unpaid leave to care for a new-born infant.  What happens in the labor market if wages are permitted to change?  What happens if the government makes it illegal to change wages in response to the legislation?

VII.              Suppose "yellow dog" contracts were legal.  Draw two labor market diagrams: One for jobs with a "yellow dog" contract, one for jobs without.

VIII.            What are the long-run side effects of plant closing laws? (1 paragraph)

IX.               How would increased immigration from Mexico be likely to affect (a) skilled U.S. labor, (b) unskilled U.S. labor, (c) U.S. capitalists and landowners, (d) Mexican immigrants, and (e) Mexicans who stay in Mexico?  Why?

X.                 Find a discussion of 19^th century U.S. labor markets in the history textbook of your choice.  Summarize what the historian says.  Which of the historian's claims would Caplan be likely to dispute?  To accept?  (1 paragraph)