Question 1

The slope of the wage-schooling locus provides an estimate of the

Accepted Answer

A)  average years of education as a function of age. 
B)  average wage or salary of workers for a given level of schooling. 
C)  economic return to an additional year of schooling. 
D)  economic cost of an additional year of schooling. 
E)  marginal cost of an additional year of schooling. 
A)  average years of education as a function of age. 
B)  average wage or salary of workers for a given level of schooling. 
C)  economic return to an additional year of schooling. 
D)  economic cost of an additional year of schooling. 
E)  marginal cost of an additional year of schooling. C

Question 2

In 2017, approximately what percent of adults in the United States had received more education than a high school degree?

Accepted Answer

A)  15% 
B)  25% 
C)  35% 
D)  67% 
E)  90% 
A)  15% 
B)  25% 
C)  35% 
D)  67% 
E)  90% D

Question 3

In 2017, approximately what percent of adults in the United States had not graduated from high school?

Accepted Answer

A)  2% 
B)  4% 
C)  8% 
D)  15% 
E)  20% 
A)  2% 
B)  4% 
C)  8% 
D)  15% 
E)  20% C

Question 4

The general consensus from analysis of the Tennessee Student/Teacher Achievement Ratio (STAR) experiment suggests that students assigned to small classrooms of 13-17 students, compared to other students assigned to classrooms of 22-27 students, experienced

Accepted Answer

A)  no change in academic achievement or college attendance. 
B)  an increase in both academic achievement and college attendance. 
C)  greater self-confidence. 
D)  higher likelihood of dropping out of school before graduating high school. 
E)  more friendships. 
A)  no change in academic achievement or college attendance. 
B)  an increase in both academic achievement and college attendance. 
C)  greater self-confidence. 
D)  higher likelihood of dropping out of school before graduating high school. 
E)  more friendships.

Question 5

Twin studies are helpful in producing an unbiased estimate of the returns to schooling, because twins are likely to

Accepted Answer

A)  achieve the same amount of education. 
B)  earn comparable wages. 
C)  have similar abilities. 
D)  work in the same occupation. 
E)  work in the same industry. 
A)  achieve the same amount of education. 
B)  earn comparable wages. 
C)  have similar abilities. 
D)  work in the same occupation. 
E)  work in the same industry.

Question 6

Roughly speaking, the estimated return to a year of education in the United States is roughly

Accepted Answer

A)  0% 
B)  3% 
C)  9% 
D)  20% 
E)  50% 
A)  0% 
B)  3% 
C)  9% 
D)  20% 
E)  50%

Question 7

Labor force participation rates tend to

Accepted Answer

A)  increase with education level for both men and women. 
B)  decrease with education level for both men and women. 
C)  decrease with education level for men but to increase with education level for women. 
D)  be unrelated to education level for both men and women. 
E)  be unrelated to education level for men but to increase with education level for women. 
A)  increase with education level for both men and women. 
B)  decrease with education level for both men and women. 
C)  decrease with education level for men but to increase with education level for women. 
D)  be unrelated to education level for both men and women. 
E)  be unrelated to education level for men but to increase with education level for women.

Question 8

Which statement about human capital is false?

Accepted Answer

A)  Human capital gives firms a way to differentiate between workers. 
B)  Workers accumulate human capital during formal education and through life experiences. 
C)  There is more human capital in the United States now than there was 100 years ago. 
D)  Human capital has a low rate of return. 
E)  Human capital tends to be an important determinant of one's wages. 
A)  Human capital gives firms a way to differentiate between workers. 
B)  Workers accumulate human capital during formal education and through life experiences. 
C)  There is more human capital in the United States now than there was 100 years ago. 
D)  Human capital has a low rate of return. 
E)  Human capital tends to be an important determinant of one's wages.

Question 9

Selection bias is a problem when trying to estimate the return to education in a standard human capital model. In this context, what does selection bias refer to?

Accepted Answer

A)  The data sample is nonrandom. 
B)  Workers self-select education levels and jobs based on their abilities and preferences. 
C)  Colleges select who they are willing to accept. 
D)  The wage-schooling locus does not have a constant slope. 
E)  The wage-schooling locus is estimated to have a negative slope. 
A)  The data sample is nonrandom. 
B)  Workers self-select education levels and jobs based on their abilities and preferences. 
C)  Colleges select who they are willing to accept. 
D)  The wage-schooling locus does not have a constant slope. 
E)  The wage-schooling locus is estimated to have a negative slope.

Question 10

The wage-schooling locus fails to allow researchers to test the theory that people choose education levels to maximize lifetime earnings because of self-selection. In this context, self-selection refers to

Accepted Answer

A)  firms paying more educated workers a higher wage than they pay less educated workers. 
B)  college graduates selecting their occupation later in life. 
C)  people letting their ability dictate, in part, how much education they complete. 
D)  college students completing high-wage majors. 
E)  firms hiring workers of varying ability. 
A)  firms paying more educated workers a higher wage than they pay less educated workers. 
B)  college graduates selecting their occupation later in life. 
C)  people letting their ability dictate, in part, how much education they complete. 
D)  college students completing high-wage majors. 
E)  firms hiring workers of varying ability.

Question 11

In order to use schooling as a signal,

Accepted Answer

A)  the signal must be costlier for low-skilled workers than for high-skilled workers. 
B)  the cost of purchasing the signal must not be so costly that high-skilled workers do not value obtaining it. 
C)  firms must be able to easily verify each worker's amount of schooling. 
D)  some people must choose to not complete schooling. 
E)  All of these are required for schooling to serve as a signal. 
A)  the signal must be costlier for low-skilled workers than for high-skilled workers. 
B)  the cost of purchasing the signal must not be so costly that high-skilled workers do not value obtaining it. 
C)  firms must be able to easily verify each worker's amount of schooling. 
D)  some people must choose to not complete schooling. 
E)  All of these are required for schooling to serve as a signal.

Question 12

Holding all else fixed, the greater is one's discount rate,

Accepted Answer

A)  the more years of schooling one completes. 
B)  the fewer years of schooling one completes. 
C)  the greater is one's wage. 
D)  the more patient one is. 
E)  the more valuable is education. 
A)  the more years of schooling one completes. 
B)  the fewer years of schooling one completes. 
C)  the greater is one's wage. 
D)  the more patient one is. 
E)  the more valuable is education.

Question 13

Suppose 40 percent of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60 percent of potential workers are less skilled and contribute only $30,000 to the firm each year. When schooling is not used as a signaling device, how much is the firm willing to pay a worker chosen at random?

Accepted Answer

A)  $30,000 
B)  $34,000 
C)  $38,000 
D)  $42,000 
E)  $50,000 
A)  $30,000 
B)  $34,000 
C)  $38,000 
D)  $42,000 
E)  $50,000

Question 14

Suppose 40 percent of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60 percent of potential workers are less-skilled and contribute only $30,000 to the firm each year. Schooling costs a highly skilled worker y per year, while it costs a less-skilled worker 2y per year. What range of y will support a signaling equilibrium?

Accepted Answer

A)  $0 < y < $50,000 
B)  $5,000 < y < $10,000 
C)  $5,000 < y < $20,000 
D)  $10,000 < y < $20,000 
E)  $20,000 < y < $50,000 
A)  $0 < y < $50,000 
B)  $5,000 < y < $10,000 
C)  $5,000 < y < $20,000 
D)  $10,000 < y < $20,000 
E)  $20,000 < y < $50,000

Question 15

The general schooling model predicts that schooling increases

Accepted Answer

A)  as both ability and the discount rates increase. 
B)  as ability increase but as the discount rate decreases. 
C)  as ability decreases but as the discount rate increases. 
D)  as both ability and the discount rate decrease. 
E)  when ability is held constant and the discount rate increases. 
A)  as both ability and the discount rates increase. 
B)  as ability increase but as the discount rate decreases. 
C)  as ability decreases but as the discount rate increases. 
D)  as both ability and the discount rate decrease. 
E)  when ability is held constant and the discount rate increases.

Question 16

What does not enter into the present value calculation of a college degree?

Accepted Answer

A)  the cost of college tuition 
B)  the cost of books 
C)  wages of college graduates 
D)  lifetime wages of noncollege graduates 
E)  the value of one's scholarships 
A)  the cost of college tuition 
B)  the cost of books 
C)  wages of college graduates 
D)  lifetime wages of noncollege graduates 
E)  the value of one's scholarships

Question 17

Why do workers typically pursue their education while young?

Accepted Answer

A)  There is more time to benefit from the higher wages that are typically associated with more education. 
B)  All of their friends pursue education while young. 
C)  Living expenses are low for a younger person. 
D)  Parents force their children to attend college immediately after high school. 
E)  They are more likely to receive a scholarship. 
A)  There is more time to benefit from the higher wages that are typically associated with more education. 
B)  All of their friends pursue education while young. 
C)  Living expenses are low for a younger person. 
D)  Parents force their children to attend college immediately after high school. 
E)  They are more likely to receive a scholarship.

Question 18

If ability is positively related to schooling, then estimating the returns to education directly from the wage-schooling profile will likely

Accepted Answer

A)  underestimate the return to schooling. 
B)  overestimate the return to schooling. 
C)  underestimate the average wage. 
D)  overestimate the average wage. 
E)  underestimate the average discount rate. 
A)  underestimate the return to schooling. 
B)  overestimate the return to schooling. 
C)  underestimate the average wage. 
D)  overestimate the average wage. 
E)  underestimate the average discount rate.

Question 19

Suppose all 18-year-olds are identical in every way except that some have easy access to credit (i.e., they face a low interest rate when borrowing money) while others have a difficult time accessing credit (i.e., they face a high interest rate when borrowing money). Which of the following statements is not true?

Accepted Answer

A)  Those who have easy access to credit have a lower rate of discount than those who do not have easy access to credit. 
B)  Those who have easy access to credit will be more likely to go to college than those who do not have easy access to credit. 
C)  The present value calculation of college will be higher for those who have easy access to credit than for those who do not have easy access to credit. 
D)  Some people who have easy access to credit will not go to college. 
E)  No one without easy access to credit will go to college. 
A)  Those who have easy access to credit have a lower rate of discount than those who do not have easy access to credit. 
B)  Those who have easy access to credit will be more likely to go to college than those who do not have easy access to credit. 
C)  The present value calculation of college will be higher for those who have easy access to credit than for those who do not have easy access to credit. 
D)  Some people who have easy access to credit will not go to college. 
E)  No one without easy access to credit will go to college.

Question 20

People decide how much schooling to receive based on

Accepted Answer

A)  their discount rate. 
B)  the marginal rate of return to schooling. 
C)  the present value of expected future earnings. 
D)  their ability to succeed in education programs. 
E)  All of the above factors influence how much schooling one receives. 
A)  their discount rate. 
B)  the marginal rate of return to schooling. 
C)  the present value of expected future earnings. 
D)  their ability to succeed in education programs. 
E)  All of the above factors influence how much schooling one receives.

The slope of the wage-schooling locus provides an estimate of the

In 2017, approximately what percent of adults in the United States had received more education than a high school degree?

In 2017, approximately what percent of adults in the United States had not graduated from high school?

The general consensus from analysis of the Tennessee Student/Teacher Achievement Ratio (STAR) experiment suggests that students assigned to small classrooms of 13-17 students, compared to other students assigned to classrooms of 22-27 students, experienced

Twin studies are helpful in producing an unbiased estimate of the returns to schooling, because twins are likely to

Roughly speaking, the estimated return to a year of education in the United States is roughly

Labor force participation rates tend to

Which statement about human capital is false?

Selection bias is a problem when trying to estimate the return to education in a standard human capital model. In this context, what does selection bias refer to?

The wage-schooling locus fails to allow researchers to test the theory that people choose education levels to maximize lifetime earnings because of self-selection. In this context, self-selection refers to

In order to use schooling as a signal,

Holding all else fixed, the greater is one's discount rate,

The general schooling model predicts that schooling increases

What does not enter into the present value calculation of a college degree?

Why do workers typically pursue their education while young?

If ability is positively related to schooling, then estimating the returns to education directly from the wage-schooling profile will likely

People decide how much schooling to receive based on

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 6: Human Capital

The slope of the wage-schooling locus provides an estimate of the

In 2017, approximately what percent of adults in the United States had received more education than a high school degree?

In 2017, approximately what percent of adults in the United States had not graduated from high school?

The general consensus from analysis of the Tennessee Student/Teacher Achievement Ratio (STAR) experiment suggests that students assigned to small classrooms of 13-17 students, compared to other students assigned to classrooms of 22-27 students, experienced

Twin studies are helpful in producing an unbiased estimate of the returns to schooling, because twins are likely to

Roughly speaking, the estimated return to a year of education in the United States is roughly

Labor force participation rates tend to

Which statement about human capital is false?

Selection bias is a problem when trying to estimate the return to education in a standard human capital model. In this context, what does selection bias refer to?

The wage-schooling locus fails to allow researchers to test the theory that people choose education levels to maximize lifetime earnings because of self-selection. In this context, self-selection refers to

In order to use schooling as a signal,

Holding all else fixed, the greater is one's discount rate,

The general schooling model predicts that schooling increases

What does not enter into the present value calculation of a college degree?

Why do workers typically pursue their education while young?

If ability is positively related to schooling, then estimating the returns to education directly from the wage-schooling profile will likely

People decide how much schooling to receive based on

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters