Labor Economics HW5

# Labor Economics HW5 - 1 Emmanuel Clayton EC931657 AECO370...

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1 Emmanuel Clayton EC931657 AECO370 Masters Homework on Compensating Differentials (HW6) 1. Rosie the Riveter has the following utility function over weekly wages, w, and the probability of death due to a fall, p. ± ² ±³± ´ ±µ¶¶¶± · ±¸ (i) Draw her indifference curves for U = 100, 200, 300, 400 over the range of p from 0 to 0.2. Utilily Value (U) (c) Wage p = 0 Wage p = 0.1 Wage p = 0.2 100 2000 100 300 500 200 2000 200 400 600 300 2000 300 500 700 400 2000 400 600 800

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(ii) Suppose the probability of death from a fall is zero when she works on a single storey building but it increases by 0.01 for every additional floor of the building she works on. If she can get \$200 per week to work on a (single storey) supermarket, how much would the builder of a 11 storey office block have to pay her? What about a 21 storey sky-scraper? Probability of Death (p) Wage (\$) Floor 0 200 Ground Fl 0.01 202 1 0.02 204 2 0.03 206 3 0.04 208 4 0.05 210 5 0.06 212 6 0.07 214 7 0.08 216 8 0.09
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## This note was uploaded on 02/08/2012 for the course ECON 370 taught by Professor Masters during the Spring '11 term at SUNY Albany.

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Labor Economics HW5 - 1 Emmanuel Clayton EC931657 AECO370...

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