10. In recent years, some policymakers have
proposed requiring firms to give workers certain
fringe benefits, such as health insurance. Let's
consider the effects of such a policy on the labor
market
a. Suppose that a law required firms to give
each worker $3 of fringe benefits for every
hour that the worker is employed by the
firm. How does this law affect the marginal
profit that a firm eams from each worker?
How does the law affect the demand curvefor labor? Draw your answer on a graph with
the cash wage on the vertical axis
b. If there is no change in labor supply, how
would this law affect employment and
wages?
c Why might the labor-supply curve shift in
response to this law? Would this shift in
labor supply raise or lower the impact of the
law on wages and employment?
d. As Chapter 6 discussed, the wages of some
worken, particularly the unskilled and
inexperienced, are kept above the equilibrium
leve by minimum wage laws. What effect
would a fringe-benefit mandate have for
these worken?
Answers
Answer:
10. In recent years, some policymakers have
proposed requiring firms to give workers certain
fringe benefits, such as health insurance. Let's
consider the effects of such a policy on the labor
market
a. Suppose that a law required firms to give
each worker $3 of fringe benefits for every
hour that the worker is employed by the
firm. How does this law affect the marginal
profit that a firm eams from each worker?
How does the law affect the demand curvefor labor? Draw your answer on a graph with
the cash wage on the vertical axis
b. If there is no change in labor supply, how
would this law affect employment and
wages?
c Why might the labor-supply curve shift in
response to this law? Would this shift in
labor supply raise or lower the impact of the
law on wages and employment?
d. As Chapter 6 discussed, the wages of some
worken, particularly the unskilled and
inexperienced, are kept above the equilibrium
leve by minimum wage laws. What effect
would a fringe-benefit mandate have for
these worken?