1. Career Choice and Wage Differentials?
Consider an 18-year old high school graduate who is making life decisions that will affect her/him for fifty years, that is, for ages 18 through 67 inclusive. This person is thinking about a possible investment in a college education.Throughout this problem, assume an interest rate (discount rate) of 3.75%. If a person does not go to college, then (s)he goes to work in the present period at age 18,earning a yearly salary of $20,000 per year; working in such a “high school” job the person’s salary will increase at a rate of 1% per year. This person would work on the “high school” track through age 67.
Suppose there are two types of college education, an “arts” education or a “science”education.
Suppose a college education begins now and continues for three more years into the future.
Suppose this year’s tuition is $30,000 and tuition increases 10% per year while enrolled.
Suppose tuition for an “arts” degree is the same as tuition for a “science” degree. Once enrolled, suppose there is 0% probability of failing/dropping out of school.
A college graduate with an “arts” degree begins work at age 22 at a salary of $30,000 per year; working in an “arts” job the person’s salary increases at a rate of 2% per year. A college graduate with a “science” degree begins work at age 22 at a salary of $37,500 per year; working in a “science” job the person’s salary increases at a rate of 4% per year.
A. Given the information above, what would any person do? Demonstrate and explain.Be sure to show the formula you used to reach your answer.

B. Now suppose there are two different types of person.
A “Type 1” person has a meaningful likelihood of career interruption(s).
A “Type 2” person with a college degree has a meaningful likelihood of early retirement (that is, stopping work before age 67).
For a Type 1 person, at age 28 there is a 60% probability of a 7-year career interruption (that is, the interruption is in effect for ages 28, 29, 30, 31, 32, 33, and 34); for a Type 1 person, at age 35 there is a 30% probability of a 7-year career interruption (that is, the career interruptionis in effect for ages 35, 36, 37, 38, 39, 40, and 41).
Suppose career interruptions are independent events, meaning the occurrence (or absence) of an “early” interruption is independent of the occurrence (or absence) of a “late” interruption. So how many different scenarios are there for a Type 1 person?
For a Type 1 person working on the “high school” track, during an interruption the person earns only 75% of the pre-interruption salary, and there are no pay raises; following an interruption the person returns to the pre-interruption salary and in following years there are 1%pay raises.
For a Type 1 person working on the “arts” track, during an interruption the person earns only 90% of the pre-interruption salary, but there are still 2% annual pay raises; following an interruption the person returns to what the salary would have been with no interruption and infollowing years there are 2% pay raises.
For a Type 1 person working on the “science” track, during an interruption the person earns zero; following an interruption the person returns to the pre-interruption salary and in following years there are now only 2% pay raises.
For a Type 2 person there is no possibility of a mid-career interruption. But there is a 40% probability that a Type 2 person with a college degree will stop work at age 59 (that is, notwork at age 60 or older). The possibility of “early retirement” extends only to a Type 2 person with a college degree.
Given all of this information, what would a Type 1 person do and what would a Type 2 person do? Demonstrate and explain. Be sure to show the formulae you used to reach your answers.

C. Will there be a systematic wage gap between Type 1 and Type 2 persons, even if they are both college graduates? Demonstrate and explain.

2. How Dangerous is Work?
A. In 2016 who was more likely to suffer a fatal injury on the job, a wage/ salaried worker or a self-employed worker? How do the findings compare to those of 2006? Did work become safer or deadlier? Report and interpret the relevant statistical evidence.
B. In 2016 who was more likely to suffer a fatal injury on the job, a white worker or someone for another racial/ethnic group? How do the findings compare to those of 2006? Did work become safer or deadlier? Report and interpret the relevant statistical evidence.
C. In 2016 who was more likely to die on the job, a younger worker or an older worker? How do the findings compare to those of 2006? Did work become safer or deadlier?

1. Career Choice and Wage Differentials? Consider an 18-year old...