Francisco M. Gonzalez Economics 409 Fall 2021 P1: self-selection (5%) due date: September 17, 2021 Instructions: (1) Summarize [2 points] 1 page maximum, one-sided, at least 11 pt, space and a half what you have learned from the video lectures on self-selection. Consider a particular labor market. Suppose that all women have a common An . Suppose that the distribution of market F (a) = Pr (Aim ≤ a), where woman i has market non-market productivity produc- tivities is given by produc- tivity Aim . Further, suppose that a worker's market wages equal her market productivity wi = Aim . Assume that any woman who wants a job can have one, and assume that all women participate if their market productivity is higher than their non-market productivity. (2) What is the fraction of women that participate in the market (write down the exact expression in terms of the function (3) F )? Explain. [2 points] Assume that men and women have the same distribution of productivities and assume that all men are employed. Does the average employed woman earn more or less than the average man? Explain why. [1 point]
