Reference no: EM133302397

Assume now, instead, that workers need to pay a fee to apply for jobs. Assume that the fee is 5 dollars per period and that the worker can only obtain a job offer if he pays the costs of searching for the job. a) Find the worker's reservation wage in period 1. b) Find the probability that a worker in period one will find a job. Is it higher than the one without the job application fee? c) Find the average wage of workers that decide to take a job in period one. Compare it with the one that would prevail in the environment in which the costs of searching for a job was smaller (equal to zero). e) Thinking about a period of unemployment as an investment in job search that has opportunity costs (foregone wages) and benefits; what is the change that the introduction of a job application fee creates in this environment?