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In: Economics

Using a graph, show how each of the following labor markets (assumed to be competitive and...

Using a graph, show how each of the following labor markets (assumed to be competitive and initially in equilibrium) is affected by the following changes. Explain your reasoning fully.

1.Labor market for workers who completed high school only.The workplace becomes more computerized and technically sophisticated.

2.Labor market for workers who completed college or more.The workplace becomes more computerized and technically sophisticated.

Solutions

Expert Solution

1) The market for labor has workers who are semi skilled or unskilled because of their education. This new development requires workers who are technically educated (having a college degree) so firms would demand fewer of such workers. This would shift the demand curve to the left, thus, reducing the wage rate and the level of employment

2) The market for labor has workers who are high skilled because of their education. This new development again requires workers who are technically educated (having a college degree). In this case, workers in the market are technically sound because all of them have college degree and are expected to adapt to new technology. So firms would demand more of such workers. This would shift the demand curve to the right thus, increasing the wage rate and the level of employment

Rahul Sunny answered 2 years ago
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