Assume that the labour market can be described by the following supply and demand equations: S:e...

Assume that the labour market can be described by the following supply and demand equations:

S:e = a + bP + cW

D:e = ? + ?P + ? W

where e is the log of employment, W is the log wage, and P is a log of the “population.”

a) Interpret b and ?. Explain how immigration may shift the population.

b) Solve for the equilibrium wage and employment level as a function of the population.

Show every step.

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Expert Solution

Rahul Sunny answered 1 year ago

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