Question

QUESTION 01

1. Are there some social costs and social benefits associated with the upgrade and investment in human capital? List and then briefly comment on three (3) existing costs and three (3) existing benefits.                                                                                                          [6 marks]
2. In cases where a skill type is highly specific and scarce; what does this suggest about the years of training, the distribution of income, the labour productivity, and the private and social human capital investment cost of the individuals involved?                                     [8 marks]
3. Labour supply elasticities range from very low to very high coefficients, depending on the labour units involved. Use this comment to relate supply elasticities to skill levels and to do a simple analysis of how both low and high supply elasticities determine or relate to the earning power or income distribution of labour.                                                                        [8 marks]
4. With reference to the Cob Webb Model, briefly explain the supply and demand for labour and the distribution of income accruing to a specific occupation that has a highly specific skill. Include all the necessary assumptions but no diagram is necessary.

[8 marks]

Answer 1

A