AS.180.350 Study Guide - Midterm Guide: Capital Accumulation, Marginal Product, Full-Time Equivalent

• School: JHU
• Department: AS Economics, AS Dean's Teaching Fellowship Courses
• Course: AS.180.350
• Professor: Husain

Document Summary

Chapter 5: compensating wage differentials: market for risky jobs compensating wage differentials arise to compensate workers for the nonwage characteristics of jobs, wealth of nations, adam smith (1776) It is (cid:374)ot the (cid:449)age that is e(cid:395)uated a(cid:272)(cid:396)oss jo(cid:271)s, (cid:271)ut the (cid:862)(cid:449)hole of ad(cid:448)a(cid:374)tages a(cid:374)d disad(cid:448)a(cid:374)tages(cid:863) of the jo(cid:271). Firms that have unpleasant working conditions must offer offsetting advantage (higher wage) to attract workers) Figure 5. 1 indifference curves relating wage & probability of injury on the job where. Some works enjoy being exposed to risk of injury and marginal utility of risk is positive ignore risk lovers for now. She would be worse off if she moved to riskier job and wage fell. Indifference curve u0 provides great deal of information about how much a particular worker dislikes being injured: at w1". She prefers working risky job if that job paid wage of w1"" dolla(cid:396)s.