7.2 Jessie has prospects of a 40-year career with her employer. She\'s leaminga

Question

7.2 Jessie has prospects of a 40-year career with her employer. She's leaminga lot on the job, and much (but not all) of what she's leaming would be valuable if she switched jobs to work for another firm. The figure below illustrates two net-productivity profiles. Vn (x) is Jessie's net-productivity profile with her current employer; v(x) is a profile that reflects Jessie's net productivity based only on her general training and general-training costs. wage S/hour 21 ntx) 18 15 12 3 0 5 10 15 20 25 30 35 experience (years)

Explanation / Answer

Answer:

(a) Here the answer is Vg(x)

Because Vg(x) represents the net productivity with general training.

(b) Suppose if her wage profile coincides with her net productivity profile Vn(x), then she is likely to neither quit nor be dismissed.

(c) Suppose if her wage profile coincides with her net productivity profile Vg(x), then she is likely to be dismissed since she expects to have the job for 40 years and the Vn(x) curve lies above the Vg(x) curve with that amount of experience.

(d) The wage profile that reduces inefficiencies from excessive turnover follows Vn(x) curve from 0 to 15 years of experience and Vg(x) curve for above 15 years of experience.

Thanks!

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