32.2k views
5 votes
A worker's employment rent rises with the value of her outside opportunities.

A) True
B) False
C) Partially true
D) Uncertain

1 Answer

4 votes

Final answer:

A worker's employment rent does indeed rise with the value of her outside opportunities. This is aligned with labor economic principles, where better alternatives increase the benefits of the current employment over and above the wage earned.

Step-by-step explanation:

The statement that a worker's employment rent rises with the value of her outside opportunities is true. Employment rent refers to the benefits workers receive from their job beyond the wages, which may include job security, benefits, the cost of job loss, etc.

When outside opportunities improve, the cost of losing a current job goes down, because the worker has better alternatives, therefore increasing the employment rent.

This concept is similar to having a higher opportunity set in labor economics, where a rise in wages, for example, would allow a worker more freedom in choosing between more income, more leisure, or a mixture of both, as was the case with Vivian's example.

In relation to other concepts, such as the market revolution and sharecropping, external economic and social changes can also affect the perceived value of current employment in comparison to the available opportunities outside of the current job.

Moreover, changes in labor demand can directly influence the dynamics of employment rates and wages, as seen in the illustration of labor market reactions to shifts in demand for labor.

User Meraj Al Maksud
by
8.8k points