Question:
You have been asked by your boss to predict what the hours of work by your employees would be following a proposed raise. you have had a flexible policy of workers choosing their hours and would like to determine whether the raise would have a huge impact on hours worked. You have the resultsof studies conducted for three other companies, which estimate labor supply elasticities following raises at those companies. you decide to summarize the results of those studies in a manner that your boss can understand. currently, the average employee at your company works 2000 hours a year. fill in the blanks of the table.
Firm Estimated Predicted hrs worked for avg Predicted hrs worked for ave
Elasticity employee following 5% inc in wage employee following 10% inc
A 0.1 x x
B -0.2 x x
C 0 x x