Read 2 Readings And Answer 4 Multiple Choice Questions

Berman-Bound-Griliches-QJE94.pdf

Imbens-Rubin-Sacerdote-AER01.pdf

The following is one of the main conclusions in the study of lottery winners by Imbens, Rubinand Sacerdote (AER, 2001):

1. The impact of non-labor income on labor earnings cannot be estimated since an

   “experiment” is impossible to undertake

2. People who win the lottery increase their labor earnings to be able to pay their taxes

3. Wining the lottery decreases labor earnings by about 11 percent

4. People who win the lottery decrease consumption by about 11 percent 

From the discussion in class of the paper by Imbens, Rubin and Sacerdote (AER, 2001), thefollowing is a reason why it is difficult to estimate the impact of non-labor income on work:

1. Non-labor income is not “exogenous”

2. It is hard to motivate the policy importance of the impact of non-labor income on work

3. People never truthfully report their income and hours worked in surveys

4. Natural experiments and not comparable to actual social experiments 

The following is not true about skill wage differentials as defined by Berman, Bound andGriliches (QJE, 1994)

1. An example is the difference in wages between production and nonproduction workers

2. They have been rising consistently over the last 30 years, especially during the 1980s

3. An example is the difference in wages between workers who are college and high school

   graduates

4. They have been decreasing consistently over the last 30 years, especially during the

   1980s 

   Which one of the following is not a plausible explanation of the observed trend in skill wagedifferentials during the 1980s according to Berman, Bound and Griliches (QJE, 1994)?

   1. There was a “defense buildup” of high-tech nature that caused an increase in demand for

      skilled workers

   2. International competition has implied lower demand for unskilled workers

   3. There has been a substitution effect in the demand for labor of skilled workers

   4. There has been “skill-biased technological change” during that time