Question 1

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

Accepted Answer

A) Tuition costs are lower for whites than blacks. 
B) Whites have access to more financial capital to pay for college than blacks. 
C) Post-college wages are higher for whites than for blacks. 
D) Whites have greater access to higher quality public education at the elementary and secondary level. 
E) Whites are more able to postpone earnings at age 18 than are blacks. 
A) Tuition costs are lower for whites than blacks. 
B) Whites have access to more financial capital to pay for college than blacks. 
C) Post-college wages are higher for whites than for blacks. 
D) Whites have greater access to higher quality public education at the elementary and secondary level. 
E) Whites are more able to postpone earnings at age 18 than are blacks.

Question 2

The Mincer earnings function is used to estimate

Accepted Answer

A) ability bias. 
B) the signaling effect. 
C) the social return to schooling. 
D) the value of the marginal product of labor. 
E) the age earnings profile. 
A) ability bias. 
B) the signaling effect. 
C) the social return to schooling. 
D) the value of the marginal product of labor. 
E) the age earnings profile.

Question 3

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 4

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 U.S. 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 U.S. 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 5

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) Having a non-random data sample. 
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) Having a non-random data sample. 
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 6

Which group of workers tends to have the highest unemployment rate among high school dropouts?

Accepted Answer

A) Men 
B) Women 
C) Blacks 
D) Hispanics 
E) Whites 
A) Men 
B) Women 
C) Blacks 
D) Hispanics 
E) Whites

Question 7

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

Accepted Answer

A) The marginal return to schooling increases as years of schooling increases. 
B) The marginal return to schooling is positive but falling as years of schooling increases. 
C) Average wages fall as years of schooling increases. 
D) The cost of schooling increases, but at a decreasing rate. 
E) The cost of schooling decreases, but at an increasing rate. 
A) The marginal return to schooling increases as years of schooling increases. 
B) The marginal return to schooling is positive but falling as years of schooling increases. 
C) Average wages fall as years of schooling increases. 
D) The cost of schooling increases, but at a decreasing rate. 
E) The cost of schooling decreases, but at an increasing rate.

Question 8

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

Accepted Answer

A) the return to education is low for all education levels. 
B) the return to education is constant with respect to age. 
C) on-the-job training is unrelated to the level of formal schooling. 
D) less-educated workers invest in on-the-job training more so than do the highly educated. 
E) highly educated people also invest more in post-schooling human capital compared to the less educated. 
A) the return to education is low for all education levels. 
B) the return to education is constant with respect to age. 
C) on-the-job training is unrelated to the level of formal schooling. 
D) less-educated workers invest in on-the-job training more so than do the highly educated. 
E) highly educated people also invest more in post-schooling human capital compared to the less educated.

Question 9

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 10

Paula is considering going to law school. If she does, she will spend $60,000 on tuition and books to get a college education (during the first time period), $120,000 on tuition and books to get a law degree (during the second time period), and her law degree will earn her $620,000 during the remainder of her work-life (during the third time period). Paula's time preference for money is associated with a per-period interest rate of 20 percent. Approximately what is Paula's present value of obtaining a law degree?

Accepted Answer

A) $100,100 
B) $210,400 
C) $270,500 
D) $440,000 
E) $621,900 
A) $100,100 
B) $210,400 
C) $270,500 
D) $440,000 
E) $621,900

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

The Mincer earnings function is used to estimate

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?

Which group of workers tends to have the highest unemployment rate among high school dropouts?

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

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

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

The Mincer earnings function is used to estimate

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?

Which group of workers tends to have the highest unemployment rate among high school dropouts?

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

The data suggest that wages increase more with age for the highly educated compared to the less educated. This is evidence that

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