Individuals inhabit a labor market for T = 3 periods. In each period, they receive a wage offer that is drawn from the distribution Wage Value Probability 2 0.2 5 0.6 10 0.2 Individuals discount future utilities using the discount factor \beta = 0.8. If an individual does not work in a period, their utility is b = 1. 1. Find the reservation wage of unemployed individuals in periods 1, 2, and 3. 2. Determine the number of individuals who are unemployed after periods 1, 2, and 3. 3. Determine the average wage of employed individuals in periods 1, 2, and 3.
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retracts from its usefulness as an instrument of labor. 5. What is an adequate wage? A wage which will enable the worker to live according to a decent standard
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