Test Bank
for Contemporary Labor Economics, 9th Edition: Campbell McConnell
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Chapter 9 MULTIPLE-CHOICE QUESTIONS
1. Linda quit her job as a loan officer at First Detroit State Bank to accept a similar position at First Minneapolis Savings Bank. This is an example of:
a.* geographic mobility
b. occupational mobility
c. horizontal mobility
d. vertical mobility
2. Sam left his job as an auto mechanic to accept a position in his local Sears store as an auto parts salesman. This is an example of:
a. geographic mobility
b.* occupational mobility
c. horizontal mobility
d. vertical mobility
3. If an economics professor moves from the University of California at Berkeley to the University of Texas at Austin, that is an example of:
a. job change/no change in residence
b. occupational change/no change in residence
c.* geographic change/no change in occupation
d. geographic change/change in occupation
4. Approximately what percent of the U.S. population changes residences each year?
a. Less than 5%
c.* 15% – 20%
b. 5% – 10% d. More than 25%
5. Which one of the following is a true statement?
a. Less than 3% of workers change occupations in a given year
b. Most individuals who change occupations in a given year are over 50 years old
c. Over 3 million employees are transferred by their employers each year
d.* About 30% of geographic job-related moves are accompanied by a change in occupation
6. Because migration typically involves present sacrifice in order to obtain a greater stream of future earnings, many economists consider migration to be:
a.* an investment in human capital
b. undertaken only by those who have very low discount rates
c. motivated strictly by monetary considerations
d. an impediment to economic efficiency
7. “Any worker for whom the present value of lifetime earnings will increase by migration will choose to move.” This statement is:
a. true
b. false; migration depends on undiscounted earnings gains
c.* false; there may be psychic costs of moving that deter migration
d. false; empirical evidence indicates that migration decisions have little to do with financial gains or losses
8. In the equation for the net present value of migration,
term “E2” refers to:
a. the net psychic costs of moving
b. the length of time expected on the new job
c.* earnings from the new job
d. earnings from the old job
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9. In the equation for the net present value of migration,
term “C” refers to:
a. the net psychic costs of moving
b.* the direct and indirect monetary costs of moving
10. All else equal, a worker is less likely to move:
c. earnings from the new job
d. the discount rate
a.* the smaller the wage differential between the destination and the origin
b. the lower the discount rate
c. the greater the number of years one expects to remain in the new location
d. the lower the indirect costs of migrating
11. All else equal, a worker is more likely to move if:
a. his or her spouse is also a labor force participant
b. there are school-age children in the family
c.* his or her spouse has accumulated very little job tenure
d. he or she is married
12. All else equal, a worker is less likely to move:
a. if the worker has moved before
b.* the greater the amount of specific training the worker has
c. the greater the worker’s educational attainment
d. the shorter the distance moved
13. All else equal, a worker is more likely to move:
a. the smaller the wage differential between the destination and the origin
b. the greater the direct costs of moving
c. the larger the worker’s family size
d.* the lower the discount rate
14. All else equal, a worker is less likely to move:
a. if he or she has moved before
b.* the more unionized the worker’s occupation
c. the greater the worker’s educational attainment
d. if the worker is single
15. Which one of the following helps to explain the observed relationship between age and mobility?
a.* Older workers tend to have more specific human capital and on-the-job training
b. Older workers tend to have more general training
c. Younger workers have less time to recoup their investment costs
d. Both direct and psychic costs of moving tend to decrease with age.
16. Older workers are less likely to migrate because older workers:
a. have typically accumulated more possessions, raising the direct cost of moving
b. are more likely to have to give up seniority and pension benefits
c. are more likely to have high psychic costs of moving
d.* all of the above
17. Which one of the following will tend to decrease the perceived costs of a move relative to the perceived benefits?
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a.* Renting, as opposed to owning, one’s home
b. A higher unemployment rate in the destination
c. Larger family size
d. Increased federal grants and defense contracts in the origin
18. Concerning the relationship between unemployment and migration, empirical studies generally find that:
a. families headed by unemployed persons are less likely than others to migrate
b.* a higher rate of unemployment at the origin raises the likelihood of out-migration
c. a lower rate of unemployment at the destination positively affects immigration
d. there is no relationship between unemployment and the migration decision
19. The average economic rate of return to migration is estimated to be:
a. negative
b. less than 5%
c.* between 10% and 15%
d. greater than 20%
20. The expected private rate of return to migration to a particular individual:
a.* is similar to that on other forms of investment in human capital
b. equals that individual’s actual rate of return
c. cannot be determined because there are backflows in migration
d. cannot be determined because there are earnings disparities between the origin and the destination
21. Early empirical evidence reported by Barry Chiswick indicated that foreign-born persons migrating to the U.S., all else constant:
a. tended to earn more than natives from the time they arrived at the destination
b.* initially tended to earn less than natives, caught up after 10-15 years, and eventually surpassed natives
c. typically did not catch up to the earnings of native-born workers, even after several years
d. had little or no variance in their earnings
22. Research by Borjas on relatively recent immigrants to the U.S. suggests that they:
a. tend to earn more than natives from the time they arrive at the destination
b. initiallytendtoearnlessthannatives,catch upafter10-15years,andeventuallysurpassnatives
c. have little or no variance in their earnings
d.* typically do not catch up to the earnings of native-born workers, even after several years
23. With respect to family earnings, on the average, family migration initially:
a.* raises the earnings of the primary mover but reduces the earnings of the “trailing” spouse
b. raises the earnings of wives but reduces the earnings of husbands
c. raises the earnings of both husbands and wives
d. reduces the earnings of both husbands and wives
24. Following the downturn in air travel following the September 11, 2001 terrorist attacks, several thousand highly paid Seattle-based union workers were laid off from airplane manufacturer Boeing. Many of these workers left the Seattle area to accept jobs paying less than their Boeing jobs. What can we conclude from their actions?
a. They would have been better off if they had remained in the Seattle area
b. They believed that their salaries in the new areas would eventually surpass the wage they were making at Boeing
c. The jobs they accepted must have been non-union
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d.* They believed that they would be better off than if they had remained in Seattle
25. Assuming competitive markets, migration in response to wage differentials will likely result in:
a. an increase in the total value of output, but reduced economic efficiency
b. a decrease in both the value of output and economic efficiency
c.* an increase in both the value of output and economic efficiency
d. an increase in the size of the wage differential
Questions 26 – 28 refer to the following information given in the table below. There are initially 28 workers in market A and 63 workers in market B as indicated by the shaded cells. All markets are assumed competitive and there is perfect information and costless migration; jobs in markets A and B are identical in all nonwage aspects.
26. Given the initial situation, which one of the following may be expected to occur?
a.* Workers will migrate from A to B
b Workers will migrate from B to A
c. There will be no migration of workers
d. A migration pattern cannot be determined from the information
27. After all adjustments to equilibrium take place in this market, we expect to find that:
a. the total value of output is increased, but economic efficiency is reduced
b.* both the total value of output and economic efficiency are increased
c. both the total value of output and economic efficiency are reduced
d. changes in the total value of output and economic efficiency cannot be determined
28. After all adjustments to equilibrium take place in this market, the equilibrium wage rate in markets A and B, respectively, are:
a. $8.50; $10.50
b.* $9.50; $9.50
c. $10.00; $10.00
d. $$9.50; $11.50
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Questions 29 – 33 refer to the following diagram. Initially, wage rates are WM in Country M and WU in Country U. Subsequent migration results in an equalization of wage rates.
29. Migration causes the value of output in Country M to:
a. fall by area bgc
b.* fall by area ebcf
c. fall by area WMbcWe
d. rise by WM – We
30. Migration causes the value of output in Country U to:
a. rise by area imj
b.* rise by area kijl
c. rise by area WUijWe
d. fall by WU – We
31. For native Country U workers, migration causes a collective loss equal to area:
a. imj
b. kijl
c.* WUimWe
d. WUijWe
32. For Country M capital owners, migration causes a collective loss equal to area:
a. bgc
b. ebcf
c. 0Webe
d.* WebcWM
33. The combined gain in efficiency of the two countries is equal to:
a.* area kijl – area ebcf
b. kl – ef
c. area WUijWe – area WMbcWe
d. WU + WM
34. Suppose a proposed law will ban migration into the U.S.. Considering who gains and who loses from migration, economic theory suggests that, in general:
a. U.S. businesses and U.S. workers would support the law
b. U.S. businesses and U.S. workers would object to the law
c. U.S. businesses would support the law while U.S. workers would object to it
d.* U.S. businesses would object to the law and U.S. workers would support it
35. Suppose a proposed law will expand migration into the U.S.. Economic theory suggests that there will be a net gain accruing to U.S. workers who are:
a. gross substitutes with new immigrants
b.* gross complements with new immigrants
c. employed in the same market as new immigrants
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d. employed in exporting industries
Answer questions 36 – 39 on the basis of the following diagram. Assume all migration is costless.
36. If there are initially 1000 workers in country X and 500 workers in country Y, then we should expect:
a. net migration from country X to country Y
b.* net migration from country Y to country X
c. There will be no migration of workers
d. A migration pattern cannot be determined from the information
37. Assume there are initially 1000 workers in country X and 500 workers in country Y. As workers begin to migrate, the total value of output will:
a.* increase in country X and decrease in country Y; the combined total will increase
b. increase in country X and decrease in country Y; the combined total will decrease
c. increase in country X and decrease in country Y; the combined total will not change
d. not change in either country
38. If wages are initially $10 in country X and $25 in country Y, then we should expect higher rates of capital investment in:
a.* X relative to Y, eventually resulting in increased labor demand in X
b. X relative to Y, eventually resulting in reduced labor demand in X
c. Y relative to X, eventually resulting in increased labor demand in X
d. Y relative to X, eventually resulting in reduced labor demand in X
39. If wages are initially $10 in country X and $25 in country Y, then we should expect a relative price advantage in country:
a.* X, eventually resulting in greater export sales to Y and thus greater derived demand for labor in X
b. Y, eventually resulting in greater export sales to X and thus greater derived demand for labor in Y
c. X, eventually resulting in greater imports from Y thus greater derived demand for labor in X
d. Y, eventually resulting in greater imports from X and thus greater derived demand for labor in Y
40. The total net private gain from migration to migrants and their employers:
a. is the increase in annual wages resulting from migration
b. overstates the social gain if there are real external benefits associated with the move
c.* overstates the social gain if there are real external costs associated with the move
d. understates the social gain if there are pecuniary external costs associated with the move
41. Which of the following would be considered a real (as opposed to pecuniary) externality associated with migration?
a. Capital owners in the origin will lose income as wages rise in response to reduced labor supply
b.* More public services will be required in the destination and there will be excess capacity of public goods in the origin
c. Profits of capital owners at the origin will rise as migrants leave
d. Wages of destination workers will fall as migrants enter and add to labor supply
42. Historically, immigrants in the U.S.:
a. have been less likely than the native-born population to receive welfare benefits and welfare participation by immigrants has not changed in recent years
b.* have been less likely than the native-born population to receive welfare benefits but welfare participation by immigrants has increased in recent years
c. have been more likely than the native-born population to receive welfare benefits and welfare participation by immigrants has not changed in recent years
d. have been more likely than the native-born population to receive welfare benefits but welfare participation by immigrants has decreased in recent years
43. Legal immigration to the U.S.:
a. peaked early in the twentieth century
b. typically is less than illegal immigration
c. is heavily skewed towards northern and western European nations by law
d.* is biased in favor of relatives of U.S. citizens and people who have specific job skills
44. Estimates by the U.S. Bureau of the Census suggest that since 1992, total legal and illegal immigration to the U.S. each year has averaged approximately:
a. 300,000 persons
b.* 850,000 persons
45. Immigration to the United States:
c. 4,000,000 persons
d. 12,000,000 persons
a. peaked in the 1920s with a strong wave of northern Europeans
b. was less in 1980 than 1970
c. increased between 1980 and 1985 but then fell off in the later 1980s and early 1990s
d.* surged in the early 1990s because of the amnesty provisions in the Immigration Reform and Control Act
46. An increase of 500 illegal alien workers would most likely:
a. increase domestic unemployment by 500
b. increase wages paid to native workers in industries which typically hire illegal aliens, attracting less than 500 native workers into these jobs
c. reduce wages paid to native workers in industries which typically hire illegal aliens, displacing more than 500 native workers from these jobs
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d.* reduce wages paid to native workers in industries which typically hire illegal aliens, displacing less than 500 native workers from these jobs
47. Suppose there is an increase in immigration rates of unskilled, illegal aliens. Which of the following is not likely to result?
a. Unskilled workers would lose if they are gross substitutes with illegal immigrants
b. Skilled workers would benefit if they are gross complements with unskilled workers
c. The wages of unskilled workers would fall in those markets not protected by minimum wages
d.* For each immigrant who receives a job there would be one less job available for a native worker
Questions 48 – 49 refer to the following diagram, in which Sd is the supply curve of domestic labor, St is the total labor supply curve including the supplies of illegal immigrant workers. L is measured in thousands of workers.
48. Consider the market depicted in the diagram. Supporters of illegal immigrants claim that no domestic workers are willing to do this type of work. Their claims are:
a. untrue; 30,000 domestic workers are currently performing this work
b. untrue; 40,000 workers are currently performing this work
c.* misleading; although no domestic workers are currently performing this work, some domestic workers would take these jobs at wages above $7
d. true
49. Consider the market depicted in the diagram. If all illegal aliens were deported:
a. 70,000 domestic workers would replace the 70,000 deported workers in these jobs
b.* the wage would rise to $10, attracting 30,000 domestic workers into these jobs
c. the wage would rise to $10, but there would be a shortage of 40,000 workers
d. the wage would remain at $6, and there would be a shortage of 40,000 workers
50 (World of Work 9-2) The Trafficking Victims Protection Act of 2000:
a. grants U.S. refugee status to the roughly 600,000 victims of worldwide trafficking each year
b. grants unconditional permanent U.S. residency to any victim of international trafficking
c. authorizes permanent U.S. residency to any trafficking victim upon successful prosecution and conviction of the trafficker
d.* authorizes temporary U.S. visas to up to 5000 trafficking victims per year, provided the victims help the government prosecute the traffickers
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