Labor & HR Economics, Fall 1994, Final----Richard Hannah

Instructions:  Answer each part of the exam.  I advise reading the entire exam
before beginning.  Make sure you write the number and part of the 
question you are answering.  If you get stuck on one question, don't 
spend an inordinate amount of time on it.  Take it as far as you can and 
move on to another question.  Show enough of any calculations to
allow me to duplicate your method of computation.   Draw and label graphs 
carefully. Maximum time for this exam is two hours.

I.   Based on class lecture, (1) describe the nature and magnitude of labor
market policy making at the local, state, and federal levels, (2) particularly
emphasize the federal level with respect to the four dimensions of policy 
making covered in class, and (3) from the theoretical perspective explain 
in words and graphically the trade-offs, in the aggregate demand-aggregate
supply context, between the price level and GDP (and its subsequent 
relationship to the level of employment) from the perspective of 
neoclassical economic theory.

II.  (1) Write a brief description of the conceptual categories discussed in 
class with respect to labor's share of national income.  (2) Why is the 
study of this topic important?

III. Assume an average CPI of 2 percent and a discount rate of 4 percent as 
relevant for the following years.  (1) Fill in the real and discounted 
columns. (2) What is the cumulative real discounted present value?   (3) 
What is the nominal earnings growth rate (& explain how you calculated 
it)?  (4)  Explain, including a graph, the difference between a growth rate 
calculated by a regression and the growth rate calculated by only using 
the beginning and ending periods in a time value computation.

          Nominal             Real                Present Value of
Year      Earnings       Future Earnings          Discounted Real Earnings
1         20,000
2         21,000
3         22,000
4         23,000
5         19,000
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Labor & HR Economics, Fall 1994, Test 1----Richard Hannah

Instructions:  Answer as directed below.  I advise reading the entire exam 
before beginning.  Make sure you write the number of the question you are 
answering.  If you get stuck on one question, don't spend an inordinate 
amount of time on it.  Take it as far as you can and move on to another 
question.  Show enough of any calculations to allow me to duplicate your 
method of computation.  Draw and label graphs carefully. 
Maximum time for this exam is one hour and fifteen minutes.

I.--Answer one of the following.
  (1) Using the work-leisure model illustrate why a rational worker would not 
want to work additional hours at a lower wage rate than s/he is already 
earning.
  (2) Use the work-leisure model to illustrate the derivation of a highly 
elastic labor market supply curve.  Describe an example of the kind of 
labor market for which this view of labor supply might be applicable.

II.--Answer one of the following.
  (1) Illustrate with graphs and words how one can theoretically argue that a 
union can be beneficial under specific market conditions.
  (2) Much attention has been given to structural changes in our economy and 
social changes in the "family unit" with respect to labor market behavior.  
Explain how some of these fundamental shifts present challenges to 
traditional economic theory and to the collection and analysis of 
meaningful data.

III.--Answer EACH of the following.
  (1) The ability to think in multiple dimensions has been continuously 
emphasized in this course.  Write an essay developing how the economist 
narrows the focus in the study of the many dimensions of labor markets.  
Illustrate the conceptual framework, the technical tools used, and 
identify what distinguishes the economist's view from other academic
disciplines.

  (2) For the following use end-of-period and annual compounding, and an 
annual interest rate of 7 percent.  Assume I retire today at age 65 and 
my life expectancy is 20 years.  As of today I have saved $100,000 and I 
am not going to save any more.  I will live off Social Security for 10 
years before I start drawing any savings.  How much will I draw
each year if I don't plan on leaving anything to my estate? 

IV.--You have 48 hours to send me an e-mail message commenting on the fairness
of this exam, the conduct of the class, content of the material covered, 
teaching style, or anything else which may improve the quality of 
instruction.  Maximum of 200 words.  Remember, the computer time-dates 
messages received.  
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Labor & HR Economics, Fall 1994, Test 2----Richard Hannah

Instructions:  Answer as directed below.  I advise reading the entire exam 
before beginning.  Make sure you write the number of the question you are 
answering.  If you get stuck on one question, don't spend an inordinate 
amount of time on it.  Take it as far as you can and move on to another 
question.  Show enough of any calculations to allow me to duplicate your 
method of computation.  Draw and label graphs carefully.  Maximum time 
for this exam is one hour and fifteen minutes.

Answer each of the following.

Long Answer 
I.   Using the wage-leisure model: (a) explain one plausible scenario of 
individual worker labor supply adjustment when a progressive income tax 
is implemented; (b) explain the adjustment of an individual who then 
receives this tax as a welfare benefit, and (c) explain the social 
welfare question which this model raises.

II.  (a) With respect to the production process and decision making what are 
the common qualities and differences in the views of O'Toole, Kahl, and 
Trumka?  (b) What are the challenges and opportunities faced by unions at 
the "new frontier" of labor relations?

Short Answer
III. Why would a firm hire a worker today when the wage today exceeds the 
value of the marginal product?  Explain this in the context of time value 
analysis.  You may want to illustrate this with a graph or numeric 
example if you have time.

IV.  Explain why the Dunlop Commission may play a pivotal role in U.S. labor-
management relations.

E-mail Answer
V.   An explanation often given for the lower wage of women is the occupational
crowding hypothesis.   On one hand this might be argued to be discrimination, 
and on the other a matter of choice.  Explain the essence of these two 
views via e-mail to me by 7am, Thursday, November 3.  This answer should 
be a MAXIMUM of 200 words in the message text.

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Labor & HR Economics, Fall 1994, Test 3----Richard Hannah

Instructions:  Answer as directed below.  I advise reading the entire exam 
before beginning.  Make sure you write the number of the question you are 
answering.  If you get stuck on one question, don't spend an inordinate 
amount of time on it.  Take it as far as you can and move on to another 
question.  Show enough of any calculations to allow me to duplicate your 
method of computation.  Assume a seven (7) percent discount and
annual, end-of-period computations in all time value problems.  Draw and label
graphs carefully.  Maximum time for this exam is one hour and fifteen 
minutes.

Answer two of the following.
I.  Assume you have been a member of the Tennessee Consolidated Retirement 
System for 10 years and are now 30 years old, and in divorce proceedings.  The
non-retirement property value to be divided is  $10,000.  Your spouse's 
attorney suggests to the judge that the value of your retirement should 
be included in the settlement.  According to the pension formula and 
actuarial reduction for your age, the annual value of your pension
today is $360 per year for 46 years (remaining life expectancy).  If the judge
rules that the total value of the property to be divided must include the 
retirement income and the total value must be split 50/50, how much 
should your spouse  receive in present value dollars (today)?  What is 
the legal mechanism which will allow the judge to make this ruling to
"reach" the retirement funds as part of the settlement?

II.  Assume your current salary is $30,000 and you are offered a job in 
another state for $40,000.  You calculate the annualized cost of 
relocating (higher cost of living, etc.) to be $5,000.  You conclude that 
looking more than 5 years into the future makes no sense because you 
expect to be changing  jobs again.  What does your net psychic cost have to
be to prohibit you from taking this job?

III. In  this problem, assume that labor is the only cost, and that 
calculators are sold at $3.00 each.  The last worker you hired cost 
$20,000 per year.  After a while, you estimate this worker's productivity 
per year to be 6,000 calculators per year.  You decide to invest
$1,000 in training this worker to increase his estimated productivity to 8,000
calculators per year beginning in the second year.  (a) How long will it 
take to recoup your investment?  (b)  How long will it take to break 
even?  (c) Carefully cite the relevance of the economic principles 
employed in this problem.

IV. Write the equation reflecting an internal job and salary evaluation study 
which concludes that a minimum starting salary should be $20,000 and that 
each additional point above 300 is worth $75.

Answer both of the following.
V.  Write an essay on the merits of and obstacles to internal mobility and 
external mobility as related to economic efficiency.

VI. Explain the role that the fate of unions has played in the increasing Gini
coefficient in recent years?