1. Labor supply. Catholic priests take a vow of chastity, forgoing marriage and intimate non-marital relationships. This question relates to the article posted on ANGEL (Divine Recruits).
(a) How does the vow of chastity affect the labor supply of Catholic priests? Illustrate on a graph.
It doesn't have to be a supply/demand graph because I'm not asking about demand.
(b) In 2000, the last year for which I have data, the median salary of priests (including housing), set by the bishop of the diocese, was $25,000. In contrast, full-time Protestant pastors earned $40,000. Thus, we could say that Catholic priests earn a relatively low hourly wage. How does this affect labor supply? Illustrate on a graph.
(c) A friend says, "These low salaries arent going to affect the number of people that become priests, because you are either destined to become a priest or not, and nothing is going to stop you."
In economic terms, what is your friend saying about labor supply? Illustrate this concept on a graph.
(d) Protestant pastors can marry, and their wages are determined by a fairly competitive market. Which labor market is more likely to have diculty lling all the available positionsthe market for Catholic priests, or the market for Protestant pastors? Why?
2. Household labor. (Adapted from Ehrenberg & Smith). Company P routinely hires skilled technicians on one-year contracts to work in remote locations. It offers a $20,000 signing bonus and an hourly wage of $30 per hour. Company S now enters the market and offers no singing bonus, but offers an hourly wage of $40 per hour. Company U pays $35 per hour for the rst 2,000 hours of employment, but then $40 per hour after that. All companies want employees who work more than 2,000 hours in a year (out of 4,000 possible).
(a) First, suppose that a worker receives an offer from all three companies; on the same graph, draw the income-household time ("budget") constraint for the coming year under both offers.
(Clearly label each company with different colors and an actual label).
(b) Second, consider a worker for Company P who chose to work 3,000 hours last year. Suppose the contract is up and that she now has offers from Company S and U. Describe the conditions under which she would continue to work 3,000 hours, increase hours, and decrease hours worked.
3. Compensating differentials. Using the Occupational Employment Statistics provided by the Bureau of Labor Statistics website, select your desired occupation after graduation by using the "Search OES" tool on the left menu. You will need to recreate the tables (do not screenshot) and answer the questions that follow.
(a) Recreate the table listing the Top 5 industries with the highest level of employment for your occupation. Compared to the mean annual wage for your selected occupation, describe a potential compensating differential for two of the industries in the table. Select one industry that pays above the mean annual wage and one that pays below the mean annual wage. Be clear on how your compensating differential may cause wages to be higher or lower?
(b) Take a screenshot of the (blue) map that shows the annual mean wage for your profession across various states. What region(s) of the United States do wages seem to be higher? Do you believe this is a compensating differential? Explain fully.