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ARHOLIADAU EXAMINATIONS
Mai / Mehefin 2012 May / June 2012
EC31320 ECONOMICS OF LABOUR AND
INDUSTRIAL RELATIONS
Time allowed: THREE Hours
Answer THREE Questions
Question 1
“The positive association between education and earnings is one of the most frequently
discussed relationships in empirical labour economics, and yet there is much uncertainty
as to the exact basis for this connection.” Discuss.
Question 2
Recently top economists have suggested that increasing job sharing, reducing the
working week or introducing further marginal employment subsidies will reduce
unemployment. Discuss the implications of these policies with reference to the extra
hours versus extra workers trade-off faced by firms.
Question 3
Using an example of your choice illustrate and explain how an individual’s labour supply
response to an increase in the hourly wage rate can be decomposed into a substitution and
income effect. Using the same framework analyse the labour supply response to a full
subsidy on child-care costs for a parent initially out of the labour force.
Question 4
a) Explain what is meant by statistical discrimination and illustrate using an example of
your choice the impact of statistical discrimination on wages.
b) “The measure of discrimination obtained from the Oaxaca decomposition is highly
reliable.” Critically evaluate this statement.
TURN OVER
