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10. In recent years, some policymakers haveproposed requiring firms to give workers certainfringe benefits, such as health insurance. Let'sconsider the effects of such a policy on the labormarketa. Suppose that a law required firms to giveeach worker $3 of fringe benefits for everyhour that the worker is employed by thefirm. How does this law affect the marginalprofit that a firm eams from each worker?How does the law affect the demand curvefor labor? Draw your answer on a graph withthe cash wage on the vertical axisb. If there is no change in labor supply, howwould this law affect employment andwages?c Why might the labor-supply curve shift inresponse to this law? Would this shift inlabor supply raise or lower the impact of thelaw on wages and employment?d. As Chapter 6 discussed, the wages of someworken, particularly the unskilled andinexperienced, are kept above the equilibriumleve by minimum wage laws. What effectwould a fringe-benefit mandate have forthese worken? |
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Answer» 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? |
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