Please answer all parts for upvote. 1. Consider a labor market where employers d

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Please answer all parts for upvote.

1. Consider a labor market where employers differ in the skill level (K) that they require, where K ranges from 0 to 5. Each emplover then pays a wage equal to the skill level of the job multiplied by S10. Assuming for simplicity that there is an equal proportion of employers at every wage level, the distribution of wage offers can be represented by the uniform distribution, shown below Wage Distribution 0.10 o 0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 10 20 30 40 50 60 Wages Now consider an unemployed individual with a skill level of K*-4. Assume that the person does not know the skill level associated with any particular employer and suppose that he or she searches randomly over all the firms in this labor market. a) Assuming the worker will accept any job that is offered, what is the probability that a job offer will be forthcoming at any particular employer? b) Now suppose that the worker plans to use a reservation wage strategy. What is the probability of the worker getting a better offer than the reservation wage? Let WR be the reservation wage and include wR in your answer c) What is the wage gain that can be expected from such an offer? d) What is the expected gain from additional job search under the reservation wage strategy? e) Assuming for simplicity that the marginal cost of an additional period of job search is S1.00, what is the optimal value of the reservation wage? f) What is the probability of a job offer given the reservation wage strategy? g) Using the stock flow model of the labor market, explain how the use of a reservation wage strategy impacts the unemployment rate

Explanation / Answer

A) Ans = by assuming the workers will get and accecpt anu job, the probablity of job offer will fortcoming to anu particular employer are that the job seeker will engage at any jobs but the probablity of this conditions is at 0.04.

B) ans = If the workers plan to reserve for the next wages then the probablity of the worker for getting better works than the new reservation is completely positive.

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