International Islamic University Islamabad

International Institute of Islamic Economics

TERMINAL EXAMINATION – FALL 2020-21

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Class: BS Economics Total Marks: 60

Course: Labor Economics Instructor: Dr. Muhammad Iqbal Anjum

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NOTE: Attempt the following two compulsory questions carrying equal marks:

Q.1: (30 Marks

a) Mention below any one of the two types of the noncompeting sectors, which constitute the
dual labor market. (2

b) State below the term referring to the low wage jobs, which tend to be low wage with poor
working conditions and zero returns to both education and experience. (2

c) Present below the type of discrimination arising from the firm’s use of information on the average
characteristics of the groups to which they belong for guessing potential productivity of the job
applicants. (2

d) Point out below whether the job search costs cause the firm’s labor supply curve to either be
horizontal or to slope downward or slope upward in the framework of the model having job-search
costs-related monopsony along with the absence of discriminating employers against the group of
men workers and presence of some discriminating employers against the group of women workers.

(2
e) State below any of the second factor, which is other than Number of non-discriminators/ Number
of non-discriminators, which is capable of changing the (extent of) wage differential between female
and male workers (represented by the variable Relative Wage W F/WM arising due to the
discrimination practiced by the employer against the female workers. (2

f) Point out below the group of workers having steeper labor supply curve because of their high job
search costs in the framework of the model having job-search costs-related monopsony along with
the absence of discriminating employers against the group of men workers and presence of some
discriminating employers against the group of women workers. (2

g) Point out below the group of workers having flatter labor supply curve because of their low job
search costs in the framework of the model having job-search costs-related monopsony along with
the absence of discriminating employers against the group of men workers and presence of some
discriminating employers against the group of women workers. (2

h) In case of anti-female worker discrimination practiced by an employer, state below either the
profit earned by the discriminatory employer in framework of the model of discrimination practiced
by an antiwomen employer is higher than the profit level of a nondiscriminatory perfectly
competitive employer who does not discriminate against any female worker and any male worker or
r the profit earned by the discriminatory employer in framework of the model of discrimination
practiced by an antiwomen employer is lower than the profit level of a nondiscriminatory perfectly
competitive employer who does not discriminate against any female worker and any male worker.

(2

i) Mention below the second widely published rate (other than the labor force participation
rate) as a second determinant of employment ratio of a demographic group. (2
j) State below the nature of effect of imposition of too low minimum wage (as compared to very low
wage paid by monopsonist) on employment under monopsony. (2

k) Mathematically express below the equation depicting the wage WM received by the male workers
when the female workers are paid less wage by a discriminatory employer who is biased against
women workers as well as devalues the productivity of workers and prefers men worker in his
employment decisions in the framework of model of discrimination practiced by an employer. (2

k) In case of a downward sloping labor demand curve, point out either employment level remains
constant or employment level experiences positive impact or employment level experiences negative
impact of a wage concessions offered by the employer as compared to the employment level resulting
in case of absence of a wage concession from the labor union to the employer. (2

l) Mention below the factor/determinant on which wages and job security depend under unionism. (2

m) Write down the formula used for calculating the unemployment rate. (2

n) State below either the almost (about) union membership rate (%) in the private sector in the USA
in 1973 or state the almost (about) union membership rate (%) in the public sector in the USA in
1973. (2
Q.2:

Completely blacken ( █ ) only one box corresponding to the correct answer in the following
30 parts: (30 Marks

a) Following is the work arrangement in which employees cannot be compelled to join a labor
union: (1

 Open Shop

 Union Shop

 Closed Shop

b) The following (gender-based) type/of workers’ labor force participation rate rose from
21% in 1900 to 60% in 2000, and then declined to 57% in 2016. (1

 Men

 Women

 Both Men and Women

c) Following is the Labor Force Participation Rate of a country having its Population a□
mounting to 191.8 million and its Labor Force amounting to 127.4 million: (1

 86.4 Percent

 46.4 Percent

 66.4 Percent

d) In case of dominance of the substitution effect of fall/decrease in price of capital over the
scale effect of fall/decrease in price of capital. (1

 neither the labor demand curve will shift to right nor the labor demand curve will shift to

left.

 the labor demand curve will shift to left.

 the labor demand curve will shift to right.

e) In the USA, the labor market is considered to be loose when the unemployment rate is (1

 1%.

 4%.

 7% or above.

f) In the USA, the following measure of labor unionization peaked in 1945: (1

 Only the number of union members peaked at 20,095,000.

 Only union membership as a percentage of nonagricultural employment peaked at 35.5%.

 both the number of union members peaked at 20,095,000 and union membership as a
percentage of nonagricultural employment peaked at 35.5%.

g) The difference between the wage received by a worker due to his/her scarce natural talent
and the wage available to him/her in an alternate line of work is called (1

 the noneconomic rent of that worker.

 the economic rent of that worker.

 the contract rent of that worker.

h) A strike (of employee against the management of a company’s is likely to prove less costly
to companies producing (1

 Newspapers.

 airline travel.

 steel .
i) The following strategy of the labor union raises both union wage rate and employment:(1

 both the labor union’s strategy of increasing the labor demand and the labor Union’s
strategy of restricting the supply of labor to a market

 the labor union’s strategy of increasing the labor demand

 the labor Union’s strategy of restricting the supply of labor to a market

j) According to Professor Harley Shaiken, “the automation has shifted the “whole balance”
of power in favor of (1

 labor unions.

 “management” of companies.

 nonunionized workers.

k) A downward sloping supply curve – a negative slope of supply curve – is based on the
assumption that (1

 income effects dominate substitution effects.

 substitution effects dominate income effects.

 neither income effects dominate substitution effects nor substitution effects dominate
income effects.

l) When the perfectly divisible labor can be hired (by companies) in fractional units, then a
company should employ the amount of labor (determined by intersection of company’s labor
demand curve and the labor supply confronted by the company) for which (1

 MRPL < W

 MRPL > W

 MRPL = W
m) In case of an existence of a explicitly/clearly stated productivity bargaining agreement, in the
framework of collective bargaining, the change of certain work-rule-based wage increases will result
in (1

 decreased productivity of workers.

 increased productivity of workers.

 neither decreased productivity of workers nor increased productivity of workers.

n) The Congress of the USA passed the following Act of 1959, which requires elections of
union officials by secret ballot, for ensuring increase in union democracy: (1

 Landrum-Griffin Act

 Norris-LaGuardia Act

 Wagner Act

o) In case of no change at all in the Employer Concession Schedule in the framework of the
1st Hicksian Model of Collective Bargaining, anything that shifts the Union Resistance
schedule upward due to an increase in union resistance to management, will (1

 both shorten the expected strike duration and decrease the expected equilibrium wage.

 both lengthen the expected strike duration and raise the expected equilibrium wage.

 lengthen the expected strike duration and decrease the expected equilibrium wage.

p) In case of the actual simultaneous occurrence of both a leftward shift in labor supply

and a rightward shift in labor demand as it happened in Egypt in the early 1970s, the

market wage (1

 cannot change at all surprisingly.

 can decrease dramatically.

 can increase dramatically.

q) In 1962, American President Kennedy signed Executive Order 10988, which gave federal

workers the right to organize and to bargain (1

 over wages only.

 over working conditions only.

 over both wages and working conditions.

r) In 2004, the percentage of the workers covered by the collective bargaining was the

lowest in (1

 Austria.

 Sweden.

 USA.

s) In the USA, the union membership percentage among the following sector’s workers: (1

 increased to 36.8% amongst the private sector’s workers

 increased to 36.8% amongst the Government sector’s workers.

 decreased to 6.8% amongst the Government sector’s workers

t) A strike (of employees) is likely to prove more costly to companies producing (1

 steel  airline travel  shoes

u) Union’s strategy of increasing the demand for union labor (1

 reduces both union wage rate and employment

 raises union wage rate and reduces employment

 raises both union wage rate and employment

v) According to the theory of competitive markets, the labor supply to a firm is represented
as (1
 an upward sloping labor supply curve

 a downward sloping labor supply curve

 a horizontal line

w) From the point of view of an employer who discriminates against female workers such
that d=$10 in the case of WMale = $20 per hour, the wage of female worker is (1

 $15 per hour.  $10 per hour  $5 per hour

x) As a result of the increased labor supply in female intensive occupations (when women
face obstacles that limit their access to certain male-intensive occupations), wages in the
female intensive occupations (wherein women workers become artificially crowded) (1

 increase.  decrease.  do not change.

y) Union’s strategy of restricting the supply of labor to a market (1

 reduces both union wage rate and employment

 raises union wage rate and reduces employment

 raise both union wage rate and employment

z) According to the theory of competitive markets, the labor supply to a firm is represented
as (1

 an upward sloping labor supply curve

 a downward sloping labor supply curve

 a horizontal line

α) case of coexistence of monopsony in labor market with perfectly competitive product

market, the following mathematical expression is relevant in part (i) and part (ii): (1+1=2

(i)  MRP=MP l × P  MRP > MP l × P  MRP < MP l × P

(ii)  MFC=W  MFC > W  MFC<W

β) To maximize profits, the general rule for hiring workers is that a firm should hire up to
the point where (1

 MRP = MFC  MRP > MFC  MRP < MFC

γ) The USA’s courts even sanctioned even the following

 Greyhound Contracts  Wild Cat Contracts  Yellow Dog Contracts

µ) The following hypothesis asserts that the education opens the door for those receiving it but does
not increase their productivity. (1

 Screaming Hypothesis  Screaming Hypothesis  Mainstreaming Hypothesis