To Work or Not to Work? And Who to work?
Thursday, September 10, 2009
Been working on my labor economics tutorial today... It's borinG!! So bored I just had to go out for some fresh air.. Ok.. In the end i didn't.. "Cause i have no FRIENDS..." hahaha.. Got that from someone..
Anyways.. So my tutorial goes...
Jack's hourly wage is $60 and the marginal value of his time in the household is $25 per hour.Jill's hourly wage is $50 and the marginal value of her time in the household is $20 per hour.Who will specialize in the household and who will specialize in the labor market?I all right sense of mind, I will think that Jack should work since, assuming they value household goods and market goods equally.. And they of cos have to jointly make their decisions... Gain for Jack to work 1 extra hour is $35 and Jill $30.. It makes perfect sense for Jack to work isn't it?
But then.. I was looking through my textbook, it says, for every $ of household goods jack gives up, he gains $2.40 in market goods ($60/25) and Jill $2.50 in market goods.. So Jill standing a greater gain should work. It totally sounds ridiculous to me.. So if there's any labor experts out there, enlighten me!
Anyways.. It get even more crazy on the 2nd half...
Jack's hourly wage is $20 and the marginal value of his time in the household is $10 per hour.Jill's hourly wage is $30 and the marginal value of her time in the household is $15 per hour.Who will specialize in the household sector and who will specialize in the labor market?Common sense tells me that Jill should work.. It's like DUH! It is a no-brainer? However, going by the same rule from the textbook.. It should be indifferent as to Jack or Jill to work since they both gain $2 in market goods for every $ of household goods given up...
So, moral of the story. Economics create wonders beyond imagination! Claps Claps
