Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of ẞ of normal workers, and the remaining 1-a - B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, B) are all workers employed in equilibrium? For which values (a, ẞ) only the normal workers and lazy workers employed, and for which values of (a, B) are only the lazy workers employed? Explain your findings!
Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of ẞ of normal workers, and the remaining 1-a - B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, B) are all workers employed in equilibrium? For which values (a, ẞ) only the normal workers and lazy workers employed, and for which values of (a, B) are only the lazy workers employed? Explain your findings!
Chapter10: Labor Markets And Income Distribution
Section: Chapter Questions
Problem 3SQP
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2. Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of ẞ of normal workers, and the remaining 1-a - B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, B) are all workers employed in equilibrium? For which values (a, ẞ) only the normal workers and lazy workers employed, and for which values of (a, B) are only the lazy workers employed? Explain your findings!
Transcribed Image Text:2. Consider a labour market with 3 types of workers: great workers, normal
workers, and perpetually lazy workers. The population is composed of a great
workers, a proportion of ß of normal workers, and the remaining 1 - α- B
lazy workers. A firm is looking to employ workers. The productivity of each
type of workers are $50, $20 and $10 respectively but the firm does not know
productivity, only workers do. Workers are willing to work as long as they
get paid no less than $5 lower than their productivity (example: lazy workers
are willing to work for $5 and up). For which values of (a, ß) are all workers
employed in equilibrium? For which values (a, ß) only the normal workers
and lazy workers employed, and for which values of (a, ß) are only the lazy
workers employed? Explain your findings!
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