If a pool of workers, 60% are Low-productivity workers with an estimated present value of lifetime output equal to $180,000. The rest (40%) are High-productivity workers with an estimated present...

LABOUR ECONOMICS
If a pool of workers, 60% are Low-productivity workers with an estimated present value of
lifetime output equal to $180,000. The rest (40%) are High-productivity workers with an
estimated present value of lifetime output equal to $290,000
a) Given the asymmetric information situation a prospective employer faces in
hiring from this labour pool, what is the average salary that they would pay
without a signal?
Answer. As the question demanded that $25000 employer have to be estimated then they can
have to choose which group workers they generally focused
They have to be focused on high productivity workers due to
1) They have more capacity to done there work insist of low productivity workers and
employer have to pay same then why they choose low productivity employee who
take more time to complete their work and charge same as the high productivity
workers.
For example we wave take to understand why is it so?
 Employers have to pay $25000 to each type of workers.
 If workers of low productivity take 10 days to complete 1 task
 At the same time high productivity workers are taking 5 days to
complete the similar task.
 Low productivity workers are twice slow than high productivity
workers.
 Task done by low productivity workers in a year charges $25000.
 On other hand high productivity done the same work in half year and
charge same amount
1) On behalf of that we can say employer have to choose high productivity
employee and generate good will in market by complete their task in less time
with maintaining quality of work and giving less remuneration
So we concludes that employer has the clear idea of giving remuneration, service and
maintained quality is the change only they feel which is in beneficial to employer. So the
average salary they have to pay almost $270000 if they get 20% from the high productivity
and 20% from low productivity.
This combination is fine for employer because high productivity employee are too active then
low productivity employee and work can be completed on time.
There are various methods of remunerations to workers by which we decide what should be
the appropriate or average salary provided to the workers:
1. Time Rate Wages: In this method the wages of the worker are based on time or
production. When wages are decided on time-rate basis the quantity of goods
produced by the worker is not considered, but the wages on the basis of time
spent by him at the workplace.
Wages = Hours Worked * Rate per Hour
2. Piece Rate Wages: In this method the wages are calculated on the basis of
production only, this method is also known as “piece rate wages system”. There
are three methods in this system :
a. Straight Piece Rate: In this method the worker is paid wages at a fixed rate
per unit of goods produced by...