Solution Found!
Education Spillover Benefi ts Consider a city where the initial wage of high-school dropouts is $10. Suppose the college share of the workforce increases by 2 percent. Use a demand-supply graph of the labor market for high-school dropouts to show the effects on the dropout wage. Use the numbers provided in the section “Human Capital and Economic Growth.”
Chapter 5, Problem 2(choose chapter or problem)
Education Spillover Benefits
Consider a city where the initial wage of high-school dropouts is $10. Suppose the college share of the workforce increases by 2 percent. Use a demand-supply graph of the labor market for high-school dropouts to show the effects on the dropout wage. Use the numbers provided in the section “Human Capital and Economic Growth.”
Questions & Answers
QUESTION:
Education Spillover Benefits
Consider a city where the initial wage of high-school dropouts is $10. Suppose the college share of the workforce increases by 2 percent. Use a demand-supply graph of the labor market for high-school dropouts to show the effects on the dropout wage. Use the numbers provided in the section “Human Capital and Economic Growth.”
ANSWER:Step 1 of 2
Given, the average pay for educated city dwellers rises by 2%.
Initial equilibrium in the market for school dropouts is determined by the intersection of the demand and supply curves for dropouts, which determines the W wage rate and Q quantity of dropouts.
Suppose the salary rate for a worker with a college education rises by 2%.