PS1 - Econ325 Problem Set # 1 Due to TA BEFORE Lecture on...

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ECON325 Problem Set #1, p. 1 Econ325 Problem Set # 1 Due to TA BEFORE Lecture on Monday, 1/24/2011 No problem sets will be accepted at lecture, No late problem sets will be accepted Feel free to work in groups. But please hand in individual problem sets. Please give clear concise answers (the least amount of words it takes to make your meaning clear). The point of this problem set is to think thoroughly about the models and issues discussed in lectures and conferences and to relate your own insights to the intuition given in class. 1. Poverty, Nutrition and Labor Markets This exercise is based on the lecture and the DasGupta and Ray paper. Each answer should not be longer than a couple of sentences. a. In what circumstances will unequal allocation amongst a 2-member household increase total household work capacity? Discuss the importance of the convexity of the relationship between work capacity and income. Please illustrate this in a simple graph. b. For workers with no non-labor income (e.g. land) and who are getting piece rates, draw the aggregate labor supply curve and a standard downward sloping labor demand curve with piece rates on the y-axis. When will unemployment occur? In equilibrium, why can the piece rate not be bid down so that people who are involuntarily unemployed can obtain work? c. How does having non-labor income affect the work capacity or willingness to work? ( Hint: think of the tradeoffs between working and not working for the two different types of workers.) d.
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This note was uploaded on 08/12/2011 for the course ECON 325 taught by Professor Nancyqian during the Spring '11 term at Yale.

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PS1 - Econ325 Problem Set # 1 Due to TA BEFORE Lecture on...

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