Wage and Salary Administration Review
Questions
Course Introduction
Wage and Salary Administration explores the principles, policies, and practices involved in designing and managing employee compensation systems. The course examines job evaluation methods, pay structure development, incentive plans, and the impact of legal, economic, and organizational factors on wage decisions. Students will learn how to balance internal equity and external competitiveness, comply with relevant labor regulations, and utilize compensation as a strategic tool for attracting, motivating, and retaining talent within organizations. Case studies and real-world examples provide practical insights into contemporary challenges and best practices in wage and salary administration.
Recommended Textbook Labor Economics 7th Edition by George J Borjas
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12 Chapters
360 Verified Questions
360 Flashcards
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Page 2
Chapter 1: Introduction to Labor Economics
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30 Verified Questions
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Sample Questions
Q1) Labor economics concerns
A)how labor markets work.
B)the study of education decisions.
C)the study of how households decide where to live.
D)the study of income inequality.
E)All of these are labor economics concerns.
Answer: E
Q2) When forming theories, economists must be careful to
A)include all known facts and details.
B)omit crucial factors.
C)mirror the real world as realistically but as simply as possible.
D)consider historical behavior and policies.
E)limit the analysis to two variables.
Answer: C
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3
Chapter 2: Labor Supply
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Sample Questions
Q1) Why might it be wrong to include self-proclaimed discouraged workers in calculations of the unemployment rate?
A)Discouraged workers likely have a job but are discouraged only because they would like a better-paying job.
B)Some discouraged workers are taking advantage of a low-wage period to consume large amounts of leisure.
C)Discouraged workers receive federal assistance.
D)Discouraged workers are already included in official unemployment statistics as long as no one else in their household is working.
E)By definition, discouraged workers are only temporarily laid-off, and they will return to a job shortly.
Answer: B
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4
Chapter 3: Labor Demand
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Sample Questions
Q1) For which reason is increasing the federal minimum wage not a good anti-poverty program?
A)It is very costly for the government.
B)Roughly two-thirds of minimum wage earners are not the primary worker in their household.
C)Increasing the federal minimum wage will likely increase employment opportunities.
D)The minimum wage discriminates against minorities.
E)The minimum wage discriminates against the young.
Answer: B
Q2) How does a profit-maximizing firm that is operating in a competitive labor market respond to an increase in the wage rate?
A)The firm will demand less capital due to the substitution effect.
B)The firm will demand more labor due to the substitution effect.
C)The firm will produce less output due to the scale effect.
D)The firm will demand more capital due to the scale effect.
E)The firm will demand more labor due to the scale effect.
Answer: C
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Chapter 4: Labor Market Equilibrium
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Sample Questions
Q1) Which is the distinguishing feature of the standard cobweb model?
A)The firm is a perfectly discriminating monopsonist.
B)Wages and employment levels adjust slowly over time.
C)Payroll taxes create a tax wedge, which in turn increases overall employment levels.
D)Real wages steadily increase.
E)Capital is not fixed in the short run.
Q2) The general consensus is that wages in the stricken area increase substantially in the months immediately following a natural disaster. This is most likely a result of what?
A)The government requiring wages to increase.
B)The government's anti-gauging laws.
C)A decrease in labor demand.
D)A decrease in labor supply as some workers leave the afflicted area.
E)An increase in labor supply as workers stream to the afflicted area.
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6
Chapter 5: Compensating Wage Differentials
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Sample Questions
Q1) In the standard theory of compensating differentials, a worker's reservation price is
A)the amount of money it takes to entice the worker into accepting a risky job.
B)the amount of money it costs a worker to take a risky job.
C)the amount of money a worker loses for not taking any job.
D)the amount of money it costs a worker to take a safe job.
E)the difference between the wage paid in firms offering risky jobs and the wage paid by firms offering safe jobs.
Q2) In order for the compensating differential associated with a risky job to be negative (so that a risky job pays less than a non-risky job), it must be that
A)many workers are willing to work the risky job for free.
B)most workers prefer the risky job to the safe job when both wages are equal.
C)the number of risky jobs is less than the number of workers who prefer the risky job.
D)there is great demand for labor in both sectors.
E)the government mandates that the wages in the two sectors be equal.
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Chapter 6: Human Capital
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Sample Questions
Q1) The wage-schooling locus is
A)downward sloping because education is generally productive.
B)upward sloping because education is generally productive.
C)backward bending.
D)horizontal because wages are unrelated to schooling.
E)vertical because education is a public good.
Q2) Temporary layoffs are common in the United States especially among workers who are heavily invested with specific training. Why?
A)Specific training deteriorates quickly, so a laid-off worker with specific training is not valuable to any firm.
B)The laid-off worker with specific training is more valuable to the firm that laid her off than she is to any other firm. Thus, it is in the worker's best interest to remain unemployed until recalled to work at her original firm.
C)Workers without specific training are never hired in the first place.
D)Workers with specific training know they don't need to work hard when employed.
E)Unemployment benefits are tied to specific training.
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8
Chapter 7: The Wage Structure
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Sample Questions
Q1) In general terms, which of the following statements regarding changes in income inequality in the United States is correct?
A)Inequality has increased substantially over the last 40 years as witnessed by the Gini coefficient increasing from about 0.1 in 1970 to over 0.7 in 2010.
B)Inequality has increased slightly over the last 40 years as witnessed by the Gini coefficient increasing from below 0.4 in 1970 to over 0.45 in 2010.
C)Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.5 in 1970 to almost 0.05 in 2010.
D)Inequality has decreased substantially over the last 40 years as witnessed by the Gini coefficient decreasing from about 0.8 in 1970 to just over 0.25 in 2010.
E)Inequality has stayed about the same over the last 40 years as witnessed by a Gini coefficient that has hovered around 0.6.
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Chapter 8: Labor Mobility
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Sample
Questions
Q1) Suppose the age-wage profile of immigrants has been increasing over time. That is, the age-wage profile of immigrants in the 1990s is higher than the age-wage profile of immigrants in the 1980s, which is in turn higher than the wage-age profile of immigrants in the 1970s. In this case, if one uses cohort analysis to estimate the age-wage profile of immigrants, which of the following is possible to find:
A)A negative return to moving costs.
B)A horizontal age-wage profile.
C)A positively skewed wage distribution.
D)A negatively skewed wage distribution.
E)Negatively selected immigration.
Q2) When immigrant labor is complementary to native labor in the production process, a more open immigration policy will likely result in all but which of the following?
A)Firms will value native labor more highly.
B)The labor demand curve for native workers shifts out.
C)Lower wages are paid to native workers.
D)Overall economic efficiency increases.
E)Overall native employment increases.
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Chapter 9: Labor Market Discrimination
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Sample Questions
Q1) Which of the following causes a difference in wages but does not necessarily qualify as discrimination?
A)Differences in schooling.
B)Differences in skills.
C)Differences in experience.
D)Differences in language.
E)All of the above lead to differences in wages but none of them necessarily qualifies as discrimination.
Q2) The Human Resources department at a firm has two job candidates for one position. Both candidates went to the same college, took the same classes and have the same academic record. They both performed well in the interview and said that they see the job as a long-term position. One applicant is male; the other is female. Historically within the firm, women quit their jobs at higher rates than do men. Because of this, the firm fills the position with the male candidate. What kind of discrimination is this?
A)Employee discrimination.
B)Consumer discrimination.
C)Employer discrimination.
D)Statistical discrimination.
E)None of the above.
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Chapter 10: Labor Unions
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Sample Questions
Q1) Which of the following does not describe the historical patterns of unionization and strike activity in the United States?
A)The percent of workers involved in a strike has steadily decreased over the last 40 years.
B)The percent of public sector employees who are in a union remained relatively constant from 1950 to 2010.
C)The percent of time lost to a strike has steadily decreased over the last 40 years.
D)The percent of private sector employees who are in a union has steadily decreased over the last 40 years.
E)Union membership did not change very much from 1900 to 1935.
Q2) Prior to the New Deal legislation of the 1930s that expanded the rights of unions, firms were successful in suppressing union pressures by arguing in court that unions would
A)restrict interstate commerce, which was prohibited by the Sherman Act.
B)use coercive tactics to force workers to join the union.
C)illegally spend dues on political activities.
D)reduce the United State's competitive advantage it had over Germany.
E)fail to protect the rights of children who could not legally join a union.
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Page 12
Chapter 11: Incentive Pay
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Sample Questions
Q1) Under a piece rate pay scheme where all workers face different upward-sloped marginal cost curves for providing effort,
A)all workers will provide the same amount of effort.
B)all workers will produce the same amount of output.
C)all workers will be paid the same amount.
D)workers with higher marginal cost curves for providing effort will produce more output than workers with lower marginal cost curves.
E)workers with higher marginal cost curves for providing effort will produce less output than workers with lower marginal cost curves.
Q2) A firm owner wants a manager to make difficult personnel decisions when necessary (which requires firing a worker every now and then) in order to maximize the firm's profits. The manager, however, prefers to not fire anyone. The worker also prefers not to be fired. In this example, who is the principal and who is the agent?
A)The firm owner is the principal. The manager is the agent.
B)The firm owner is the principal. The should-be-fired worker is the agent.
C)The manager is the principal. The firm owner is the agent.
D)The should-be-fired worker is the principal. The manager is the agent.
E)The should-not-be-fired worker is the principal. The firm owner is the agent.
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Chapter 12: Unemployment
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Sample
Questions
Q1) What does it mean to conduct a sequential search?
A)To search for jobs even when employed.
B)To accept a job offer from an employer, but then to still search for a better job offer.
C)To accept the first job that one is offered.
D)To apply to all job openings.
E)To determine an asking wage and then accept the first job offer that pays a wage equal to or greater than the asking wage.
Q2) Centerville has 200 unemployed people. Of these 200 people, 35 are unemployed for two weeks before finding a new job, 55 are unemployed for four weeks before finding a new job, 30 are unemployed for six weeks before finding a new job, 15 are unemployed for ten weeks before finding a new job, and 65 are unemployed for fifteen weeks before finding a new job. Approximately what is the average spell of unemployment in Centerville?
A)2 weeks
B)5 weeks
C)8 weeks
D)11 weeks
E)14 weeks
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