ECONOMICS
0401
SUPPLEMENTARY
1. In George Leef’s article “Are Government Investments in Higher
Education Worthwhile?”:
a.
Why do
many college graduates increasingly have
to take jobs that do not
cover their investment? What evidence does the author provide for this
observation?
b. Why is the income
differential between college graduates and non-graduates so misleading for
making decisions about going to college today? Explain.
c. Is the college degree
absolutely essential for most jobs our economy? Why has the
college degree become just a credential and what will happen as more
students obtain this credential? Explain.
d. Will additional spending
by state governments on higher education increase state economic growth? (Hint:
What did Richard Vedder find?)
2. In Miguel
Palacios’ article “Human Capital Contracts”:
a.
Explain what barriers exist for students
wanting to invest in human capital.
b.
How are risky projects financed through
the capital markets? Contrast Friedman’s application of this idea to the use of
subsidized federal loans.
c.
What is a human capital contract?
Briefly explain the features of such a contract.
d.
Why do such contracts reduce uncertainty,
eliminate default due to financial distress, and give subsidies only to
low-income earners?
e. Explain why such contracts will have a
positive effect on the higher education market. (NOTE: With the current
subsidy driven system we see college costs constantly rising. With more
competition between schools emerging with the use of human capital contracts
what should happen to the cost of a college education?)
3. In Edwin S. Rubenstein's article "The
College Payoff
Illusion":
a. Are workers without a
college degree doomed to near-poverty?
b. What is the rate of
return on a college education? Does this imply a shortage or surplus of college
graduates? Explain.
c. What kinds of jobs do a
significant proportion of college graduates obtain? Does this explain why
Rubenstein argues that we are getting too many college graduates not too few
(as indicated by the rate of return on a college education)? Explain.
d. Explain what Rubenstein
means when he says that "Poor high school preparation" equals
"High need for college."
e. How do Pryor and Shaffer
resolve the paradox posed by Rubenstein: That we seem to have too few college
graduates (as indicated by the rising wage gap between college graduates and
high school graduates) as well as too many graduates (as indicated by the
number of graduates taking positions where a college degree is not required)?
Explain.
4.
In William McGurn’s article “Labor Day and the American Dream”:
a. Why do Lerman and Holzer argue that
college is not the only way to gain human capital?
b.
Does
further education always mean a college
education? Explain.
c. Can entrepreneurship
substitute for going to college? Explain. (Hint: Is going to college the only
way to gain a skill or human capital?)
5. In Jennifer Roback's article "Exploitation in the Jim Crow South:
The Market or the Law?"
a. Why were the Jim Crow
Laws passed? Briefly explain the effect of the four main laws on worker
mobility.
b. What evidence exists to
support the theory that Jim Crow Laws impeded the mobility of workers? Explain
briefly.
c. Do market forces allow
blacks to improve themselves? Can laws help or hinder them in this process?
6. In Michael Fix and Jeffrey Passel’s article
“Impact
of Immigrants on the US Labor Market”:
a. What is the overall impact of immigrants on
the US labor market?
b.
On what evidence is
this conclusion based?
c. According to the authors, what
industry-specific impacts occur? Explain.
d. What contributions do immigrants make to the
national economy? Explain.
7. In Douglas
Massey’s article “Backfire at the Border”:
a.
Why was 1986 a pivotal year according to
Massey?
b.
Briefly explain what the
c.
What effect have the
d.
What has happened to the Border Patrol’s
enforcement costs between 1986 and 2002? Is this an efficient use of taxpayer’s
money?
e.
Explain why
f.
What policies does Massey advocate to
curb illegal immigration?
8.
In Giovanni Peri’s
article “
a.
In the long-run are average wages
determined by the relative supply of labor? Explain, noting Peri’s
qualification of his answer.
b.
Peri notes
that “it is clear that immigrants have increased the supply of workers lacking
diplomas far more than the supply of high school and college graduates.”
Explain the consequences of this observation for immigrants with no diploma and
native workers with no diploma and what past trends indicate for the future of
these workers.
c.
Explain what Peri
means by labor complementarities.
d.
Explain why high-skilled immigrants are
important to our economy (see section on Brain Gain).
e.
What effect do immigrants have on
unemployment and wages among native workers?
f.
How do less educated native workers take
advantage of job opportunities created by immigrants? Explain.
9. In Daniel
Griswold’s article “As Immigrants move in, Americans Move Up,”:
a. Briefly summarize the three ways in which we
can measure the size and composition of the underclass.
b. Explain how immigration has been a factor in
shrinking the underclass in recent years and why this contradicts the argument
that immigration has been especially harmful to African-American workers.
c. Explain what Griswold means by the win-win
dynamic which occurred during the great migration of European immigrants nearly
100 years ago.
d. Explain why immigration has created a less
dysfunctional underclass.
e. Explain how Peri’s
article and Griswold’s article are similar.
10. In Richard B. Freeman
and James L. Medoff's article "The Two Faces of
Unionism,"
a. What are the two
mechanisms for dealing with divergences between desired conditions and actual
conditions in the workplace? Explain.
b. Why does effective
collective voice require collective rather than individual bargaining? Explain.
c. Explain the difference
between employer sensitivity to the needs of the marginal worker and
sensitivity to the needs of the average worker.
d. Unions offer workers a
measure of due process through grievance and arbitration systems which are not
available at non-union firms. Such institutional adaptations lower the cost of
voice. Explain how this affects the amount of voice we would expect to see in a
union firm compared to a non-union firm. (Question: Is the absence of a
grievance mechanism a sign that non-union workers are more arbitrarily treated?
Recall Epstein's argument here about the informal constraints on arbitrary
employer actions in a contract at-will situation.)
e. According to Freeman and Medoff
which face of unionism predominates? Explain.
f. What evidence do Freeman
and Medoff use to support their view that unions
increase productivity? Explain.
11. In John Burton's article
"Capitalism, Democracy, and
the Problem of Organized Sectional Interests":
a. What is Simons' Thesis?
Briefly explain its logic, being sure to include explanations of the disruption
thesis and the extermination thesis.
b. How do Freeman and Medoff view unions? Would they agree with Simons' analysis?
Explain.
c. Do unions represent
their members? Explain how
d. Why are the costs of
monitoring the union leadership so high?
e. Explain how the market
constrains the monopoly power of unions. Are such constraints effective? (Hint:
What has been happening to the proportion of private non-farm employment that
is unionized?)
f. Do unions really
contribute to the firm's welfare? How do the claims made by Freeman and Medoff here involve them in an inconsistent position?
Explain.
12. In Charles Baird's
article "Toward Equality and Justice in Labor Markets":
a. What four factors are
crucial for a voluntary exchange to occur?
b. What do equality and
justice mean to Baird? Explain. Do you agree with these definitions? (If you do
not you must formulate an alternative definition.)
c. How does the Norris
LaGuardia Act violate Baird's notions of equality and justice? (There are 5
points so discuss 3 of the most important ones.)
d. How does the Exclusive
Representation clause of the NLRA violate Baird's notions of equality and
justice? Explain.
e. Why are
company unions banned in the NLRA? Explain.
f. What is the Union
Security clause under the NLRA and how does Baird criticize it?
g. According to Baird, what
are the most important reforms of the NLRA? Explain briefly.
13. In Richard Vedder’s article “Right-to-Work Laws:
a.
Explain what effect right-to-work laws
have on migration, labor force participation and human well-being.
b. Explain why right-to-work laws might lead to
higher economic growth.
c.
Explain why the anti-right-to-work lobby
is probably stronger than the pro-right to work lobby but we remain in
political equilibrium (no more laws passed for the last 20 years).
14. In Richard Epstein’s
article “The Ominous Employee Freedom of Choice Act”:
a.
Briefly explain the role of each one of
these elements of the common law which helped protect workers and employers
from unions before 1935:
(1)
Antitrust ban on horizontal combinations of labor unions and how it was
neutralized.
(2)
The yellow dog contract and the tort of inducement to breach a contract
(3)
The fact that employers were not obligated to bargain with unions.
b.
Briefly explain why Epstein thinks that
union membership in the private sector has declined despite all its advantages.
c.
What is the card check and why is it an
infringement on the political right of free association for both worker and
employer guaranteed in the First Amendment?