SOLUTIONS MANUAL. Labor Economics 9th Edition by George J. Borjas
TABLE OF CONTENTS CHAPTER 1: Introduction CHAPTER 2: Labor Supply CHAPTER 3: Labor Demand CHAPTER 4: Labor Market Equilibrium CHAPTER 5: Compensating Wage Differentials CHAPTER 6: Education CHAPTER 7: The Wage Distribution CHAPTER 8: Labor Mobility CHAPTER 9: Labor Market Discrimination CHAPTER 10: Labor Unions CHAPTER 11: Incentive Pay CHAPTER 12: Unemployment
CHAPTER 2 2-1. It is costly to commute to work, and the cost typically involves both time and money. (a) Suppose that a worker’s commute involves traveling a long distance on a highway that is about to start charging toll fees of $Y. There is no other way for the person to get to their job. What will happen to hours of work as a result of this increase in commuting costs?
In the absence of the toll fees, the worker would choose point P and work T − L0 hours. If it costs $Y to get to work, the budget line shifts down by $Y, and the worker would then choose point R and would work T − L1 hours. The introduction of toll fees, therefore, acts like an income effect, reducing the demand for leisure and lengthening the work week.
(b) Suppose a worker’s current job is located very near to their house, so that the time it takes to commute to work is essentially zero. The firm is considering a move to another town, and it will then take the worker 10 hr per week to get to and from work, regardless of how many hours the worker actually decides to work. What will happen to the worker’s
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