Assume that college-educated labor and high school-educated labor are complements in production. That is, the two types of labor work together, so that an increase in the quantity of either type increases the productivity of the other type of labor
Is this consistent with the observed increase in the college wage premium?
Yes. Labor complementarity helps to explain why the wage for college-educated workers continues to rise, even while the supply is rising. The marginal product of college-educated workers does not fall, so long as their skills can be combined with the input of less-educated workers. An important aspect of skill-biased technical change is to allow a given quantity of relatively uneducated workers to support rising productivity among an increasing quantity of highly educated workers. Complementarity helps to explain how the wage for uneducated workers remains relatively stable, rather than declining toward zero as the wage for college-educated workers continues to rise.
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The long-run equilibrium of monopolistic competition is characterized by
A) P = MC = ATC. B) P = MC > ATC. C) P = MR = MC. D) P = ATC > MC.
Which of the following statements are correct about the age-earnings cycle?
A) Earnings generally increase up till age 30 and then steadily decrease. B) Earnings increase throughout a prison's lifetime until they reach retirement. C) Earnings increase with age because workers become more productive as they age until around 50 years. Around 50 the effects of aging outweighs the further increases in productivity. D) Since every person is different we can reach no general conclusions about the age-earnings cycle.
The replacement of older products by newer improved ones is called
a. trickle-down economic growth. b. creative destruction. c. economies of scale. d. planned obsolescence.
The environmental problems of China is not caused by
A. a lack of central planning in the economy. B. the burning of low-quality, high-sulfur coal. C. a lack of pollution controls. D. the one-child policy of population control.