Problems based on Ehrenberg, Smith, and Hallock 14e (2021):

Topic Question Points

10. Immigration RQ. 10.8 4 P. 10.2 8 P. 10.4 10

12. Gender, Race, Ethnicity RQ.12.9 8

13. Unions P.13.2 4

14. Unemployment RQ.14.2 4 RQ.14.3 4 P.14.2 4

15. Inequality RQ.15.4 4

16. Trade and wages RQ.16.4 4 . 54

Did you work with other students? List them below:

Please type your name as an affirmation of the Honor Code at the University of California, Berkeley.

“As a member of the UC Berkeley community, I act with honesty, integrity, and respect for others.”

Type your name:

RQ.10.8 [4 points] Consider two immigrant receiving countries that are identical except in one  way: for religious reasons, country A prohibits working, driving, and other activities by women,    while country B has no such prohibitions. Otherwise, immigrants to either country are free to      arrive, work, send remittances, and leave after several years if they wish. Country A and country B have the same labor demand curves, for example, and observationally identical stocks of        native workers, capital, and technology.

Suppose in immigrant sending countries, there is an available but not unlimited pool of potential immigrants at prime working ages, ages 25-64, who also have formed family relationships as is typical. Not all are partnered, but many are.

a.   [2 points] If there were no prohibitions on activities by women in country A, what would you expect to be true in equilibrium about the wages paid to immigrant workers in        country A and country B, call them wA and wB ?

b.   [2 points] With the restrictions on women’s activities, what would you expect to be true in equilibrium about the wages paid to male immigrant workers in country A and country B, call them wmA and wmB ? Recall the upshots of Chapter 8 about compensating wage        differentials.

P.10.2 [8 points] Suppose that the demand for rough laborers is

LD  = 100 – 10 W

where W = the wage in dollars per hour and L = the number of workers. Suppose labor is        supplied inelastically, meaning that the labor supply curve is vertical at the number of workers.

Suppose immigration increases the supply of rough laborers from 50 to 60.

(a) [2 points] Sketch out labor demand and labor supply in this market, and label some important numbers like the y-intercept.

(b) [2 points] What are the returns to the immigrants themselves?

(c) [2 points] What happens to the returns to native rough labor? Be specific.

(d) [2 points] What happens to the returns to other factors? Be specific. (Recall that other  factors earn the rest of GDP, and GDP is the total area under the labor demand curve.)

P.10.4 [10 points] The table below shows labor demand, native labor supply, and immigrant     labor supply in a labor market. “Demand” is the number (in thousands) of employees that firms  would be interested in hiring at particular wages. “Domestic supply” is the number (in                  thousands) of native workers who are interested in working in the occupation at particular           wages, and “immigrant supply” is the number (in thousands) of immigrants who are interested in working at particular wages.

Immigrant labor supply is inelastic and constant, while native labor supply is not. Total labor supply is the sum of native labor supply and immigrant labor supply. The last column is left blank for the user to fill in.

(a) [2 points] Graph the labor market diagram, showing labor demand, native labor supply, and total labor supply.

(b) [2 points] What is the equilibrium wage rate before immigration? How many workers would be hired?

(c) [2 points] What is the equilibrium wage rate after immigration? How many workers would be hired? How many domestic workers would be hired? How many immigrant workers    would be hired?

(d) [4 points] Has immigration caused a change in the number of domestic workers hired? What was the change, if any? Why did the change, if any, occur?

RQ.12.9 [8 points] Since the end of the 19th century, women have lived longer than men on     average. Suppose an employer hired men and women, paid them the same wage for the same  job, and offered a defined benefit pension, which pays a constant amount each month after      retirement, until the worker’s death. Workers had to contribute to the pension fund in order to     receive it in retirement, and the employer required women either (1) to contribute a larger           amount per paycheck toward the pension, or (2) to take a smaller pension benefit once retired.  The employer otherwise would face paying out more of the pension fund to women than to men, on average, because women lived longer after retirement.

According to a decision by the Supreme Court, Los Angeles Dept. of Water and Power v. Manhart, 435 U. S. 702, commonly  known as Manhart, the employer was guilty of gender        discrimination, prohibited under Title VII