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HW4 - University of Illinois at Urbana-Champaign Professor...

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University of Illinois at Urbana-Champaign Professor Ron Laschever, ECON 440, Spring 2010 1 Problem set #4 Due at the start of class on March 9 1. Answer problem 1 on page 483 in the Borjas textbook ( this is problem 11-1 on page 493 in the fifth edition ). ANSWER PROBLEM #1 NOT THE REVIEW QUESTION #1. 2. Small firms are less likely than large firms to offer health insurance to their employees. One reason for this is that health insurance tends to cost more for small firms than for large firms. Explain why health insurance costs more for smaller insurance pools. 3. Companies are increasingly offering more “lifestyle” and non-traditional benefits, such as on-site fitness, medical, and dining facilities. For example, go to http://www.google.com/support/jobs/bin/static.py?page=benefits.html and check out the benefits that Google offers their U.S.-based employees (or, go to www.google.com and search for “Google U.S. Benefits”). Two motivations we discussed in class for why firms offer benefits are, first, that firms may be able to purchase the benefit at a lower cost than could the employee. Second, by offering a
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