Chapter 15

Question 1

Compensating Differential

Answer 1

A difference in wages offered to offset the desirability or undesirability of a job.

Question 2

Human Capital

Answer 2

A set of skills that workers acquire eon the job or through education.

Question 3

Signaling Theory

Answer 3

Argues that a diploma confers value based not on what is learned to get a degree, but rather what it signals to prospective employers.

Question 4

Union

Answer 4

A group of workers who bargain collectively for better wages and benefits.

Question 5

Strike

Answer 5

A work stoppage designed to aid a union’s bargaining position.

Question 6

Binding Arbitration

Answer 6

Some union worker submit to a third party for arbitration instead of going on strike.

Question 7

Efficiency wages

Answer 7

Wages higher than equilibrium, offered to increase worker productivity.

Question 8

Productivity

Answer 8

The effectiveness of effort as measured in terms of the rate of output per unit of input.

Question 9

Wage discrimination

Answer 9

When workers with the same ability as others are not paid the same because of their race, ethnic origin, sex, age, religion, or some other characteristics.

Question 10

Life Cycle Wage Pattern

Answer 10

The predictable effect that age has on earnings over the course of a person’s working life. Wages peak for people in their early 60s and then slowly fall after that.

Question 11

Occupational Crowding

Answer 11

The phenomenon of relegating a group of workers to a narrow range of jobs in the economy.

Question 12

Winner take all

Answer 12

Occurs when extremely small differences in ability lead to sizable difference in compensation.

Question 13

Income inequality Ratio

Answer 13

Calculated by dividing the top quin-tile’s income percentage by the bottom quin tile’s income percentage.

Question 14

Poverty Rate

Answer 14

Percentage of the population whose income is below a poverty threshold.

Question 15

Poverty Threshold

Answer 15

The income level below which a person or family is considered impoverished.

Question 16

Gini Index

Answer 16

Measurement of the income distribution of a countries residents

Question 17

Lorenz Curve

Answer 17

Visual way of representing the gini index

Question 18

In-Kind Transfers

Answer 18

Transfers (mostly to the poor) in the form of goods or services instead of cash.

Question 19

Underground economies

Answer 19

Composed of markets in which goods and services are traded illegally.

Question 20

Income Mobility

Answer 20

The ability of workers to move up or down the economic ladder over time.

Question 21

Medicaid

Answer 21

A joint federal and state program that helps low-income individuals and households pay for the costs associated with long term medical care.

Question 22

Samaritan’s Dilemma

Answer 22

Occurs when an act of charity creates disincentives for recipients to take care of themselves.