An employee values the personal cost of putting in effort at her job at $2 per hour. She evaluates her financial situation over a 156-week period. Suppose her work environment becomes more stressful, causing her to now value the personal cost of her effort at $3 per hour. Assuming all other factors remain constant, what is the direct consequence of this change on the minimum hourly wage the employer must offer to ensure she continues to put in effort?

Calculating Total Cost of Effort

Impact of Job Security on Employee Incentives

Critiquing Model Assumptions in Labor Economics

In an economic model of employment, if an employee's 'planning horizon' is defined as 156 weeks, it signifies that the employee intends to remain in their current job for a maximum of 156 weeks before seeking other opportunities.

Calculating the Total Value of Employment

An economic model analyzes an employee's incentive to work hard. The model considers the employee's 'cost of effort' (a monetary value for the unpleasantness of work) and their 'planning horizon' (the number of weeks they consider when evaluating their job). Assume an employee's cost of effort is $2 per hour for a 40-hour week, and their planning horizon is 156 weeks.

Which of the following hypothetical changes would cause a greater reduction in the total net value the employee gets from their job over their planning horizon?

Evaluating Worker Profile from Economic Parameters

Analyzing the Effect of Social Policy on Job Valuation

Interpreting an Employee's Economic Profile

Figure 6.8a: Maria’s Next Best Alternative and Total Employment Rent