Re: ISI 2015 PEB Sample Question 5

Posted by L on
URL: http://discussion-forum.276.s1.nabble.com/ISI-2015-PEB-Sample-Question-5-tp7596064p7596127.html

For second part, I did something like this:
TL = total labor income , TLm = male labor income
we need to calculate TLm/ TL =Z
TLm = Wm*Lm
TL = Wm*Lm + Wf*Lf = Wm(Lm+Lf/2) as Wm=2Wf

So, Z = 2Lm/ (2Lm+Lf)
from first order conditions, you get:

A- Lm - Lf - Wm - Wm/ Em = 0            Em- epsilon for male
Lm+Lf = A-3/2Wm

So, Z = Lm/ (2Lm + Lf)
 = 2Wm^2 / (A -3/2 Wm + sqrt (Wm/2))

So, If A increases then  Z decreases.