Prove that the worker uses a reservation wage r

Reference no: EM131139101

Formulate the problem in Section 16.5.2 as one of an unemployed worker sampling wages from an exogenously given stationary wage distribution H (w). The objective of the worker is to maximize the net present discounted value of his income stream. Assume that once the worker accepts a job he can work at that wage forever.

(a) Formulate the dynamic maximization problem of the worker recursively, assuming that once the worker finds a job he never quits.

(b) Prove that the worker never quits a job that he has accepted.

(d) Calculate the expected duration of unemployment for the worker.

(e) Show that if the wages in the distribution H (w) are offered by firms and all workers are identical, the wage offers of all firms other than those offering w = R are not profit maximizing. What does this observation imply about the McCall search model?

Reference no: EM131139101

Questions Cloud

Write the given assignment : Explore the three cultural sources: Centre for international Learning, Culture Crossing, and Kwintessential Language and Culture Specialists.

Discuss how a wage push in the form of a wage floor : Then there exists a unique BGP allocation in which there is only labor-augmenting technological change, the interest rate is constant and consumption and output grow at constant rates.

Find the total cost of roasting : A company has found that the cost, in dollars per pound, of the coffee it roasts is related to C'(x) = -0.016x + 8.75, for x ≤ 300, where x is the number of pounds of coffee roasted. Find the total cost of roasting 150 lb of coffee

What is the nature of the lease to delaney company : What is the nature of this lease to Delaney Company? What is the present value of the minimum lease payments? Record the lease on Delaney Company's books at the date of inception.

Prove that the worker uses a reservation wage r : Show that if the wages in the distribution H (w) are offered by firms and all workers are identical, the wage offers of all firms other than those offering w = R are not profit maximizing. What does this observation imply about the McCall search m..

Calculate mcdonnell myer earnings per share for the year : Q-1: McDonnell-Myer Corporation reported net income of $1,150 million. The company had 469 million common shares outstanding at January 1 and sold 42 million shares on Feb. 28. As part of an annual share repurchase plan, 6 million shares were retired..

Provide a significant amount of latitude in the accounting : Provide a significant amount of latitude in the accounting provisions that are available to be used by corporate management.

Formulate the maximization problem of the entrepreneur : Prove that if the entrepreneur has turned down production with some technique a' at date t, he will never accept technique a' at date t + s, for s > 0 (i.e., he will not accept it for any possible realization of events between dates t and t + s).

What are the advantages of knowing another language : What are your thoughts on introducing language teaching into American early education (elementary grades)? Do you think that children today consider knowing another language beneficial? Why or why not? What are the advantages of knowing another la..

User Account

All Pages