Exam 15: Inequality in Earnings

In an economy, employers cover the cost of health insurance by the difference between what the worker produces and what the worker gets in wages. If the cost of health insurance goes up by $5000 for all workers, what will happen to earnings inequality (as measured by the 80:20 ratio)?

Changes in labor demand can result from changes in either product demand or the capital-labor mix. During the 1980s,

The Lorenz curve will ________ whenever the distribution of family income becomes less equal.

The widget industry is perfectly competitive and produces 1000 widgets. Currently, it takes one unit of skilled labor and two units of unskilled labor to produce one widget. Technological change then increases the productivity of skilled labor only. Afterward, the total employment of skilled workers goes up. Which of the following is consistent with this result?: ________ units of skilled workers and two units of unskilled labor are needed to produce one widget and total output is ________ widgets.

In a competitive industry, output is produced with skilled and unskilled labor. Factor-biased technical change that increases the productivity of skilled labor, will, at a given ratio of skilled to unskilled labor, shift any given isoproduct curve ________ the origin and ________ the absolute slope of the isoproduct curve (when the number of skilled labor is along the horizontal axis). Pick the best pair of answers

Assume that less skilled workers are in the lower half of earnings. Which of the following events would cause the 80:20 ratio of incomes to go from 2.0 to 3.0?

If supply shifts were the primary cause behind the increasing wage gap between highly-educated and less-educated workers then

The Gini coefficient in a society where all families have equal incomes would be

Much of the recent growth in income inequality was caused by

The widget industry is competitive. Widgets (W) are produced with skilled labor (S) such that each skilled labor produces c widgets such that W = aC. If technological progress makes skilled labor more productive, then more skilled workers will be employed

Which of the following will reduce inequality?

The earnings and employment of those with more human capital have both increased dramatically since 1980. This suggests that their ________ curve capital had shifted ________.

According to the Gini coefficient, income EQUALITY in the United States during the 1980s

Data on the ratio of wages of full-time workers at the 90th percentile to those at the 10th percentile show all the following EXCEPT

If the wages of less-educated workers were reduced by supply shifts, then we would expect to see

In nation X, inequality is measured with reported income and does not include welfare benefits. Suppose welfare benefits are increased and those on welfare who continue to work cut slightly back on their hours of work. Measured inequality will ________ and true inequality will likely ________.

Suppose all persons have the same innate ability and the same access to capital markets. Which of the following will decrease inequality?

An economist in a foreign land observes that the earnings of college graduates have increased relative to the earnings of high school graduates. Over the same period, the relative number of college graduates has gone down. Which of the following explanations is consistent with these two observations? The increase in earnings inequality between high school and college graduates

If all incomes were to double (due to inflation, for example) then the coefficient of variation of income will

Suppose that earnings instability (such that income can go up or down) increases for the lower 20 percent of the workforce. The increase in inequality as measured by the 90:10 ratio will ________ the increase as measured by the 80:20 ratio