Which of the Following Regarding Roy's Model of Earning Determination

question 5

Multiple Choice

Which of the following regarding Roy's model of earning determination is NOT correct?

• A) Wages are perfectly equalized across sectors, as workers with different skills choose the sector in which they earn more than in any other job.
• B) People choose their occupation (or type of job or employer) on the basis of comparative advantage.
• C) Comparative advantage results in a selection bias since workers with different sets of observed and unobserved skills tend to sort themselves into different jobs or occupations.
• D) A market clearing equilibrium holds because no worker would prefer to switch to a different kind of job in equilibrium.
• E) Most workers earn rents in equilibrium in the sense that the wage in the job they choose is higher than what they would get in other jobs.