In: Economics
The City of Omaha announces that a major aircraft employer will move to the area. This will cause the creation of jobs amounting to 2% of the current labor force. Using the formulas for analyzing the effects of an increase in labor demand, estimate the following:
a. What will happen to the equilibrium wage and employment in the region if the wage elasticity of supply is 1.5 and the wage elasticity of demand is 1.0?
b. What would be the jobs multiplier in that case, if the initial direct change in employment is 2%?
c. What would be the effects on equilibrium wage and employment if the wage elasticity of supply were higher, at 2.0?