Question

Imagine the Raiders football team would like to move to Sacramento, CA. While we can't know the overall effect on jobs, we can make assumptions based on data.

a) Explain three reasons why building a stadium for the Raiders could results in a net benefit or cost for Sacramento. At least one reason should be a positive/pro, one should be negative/against.

b) If the stadium is built, what can we expect to happen to the local labor market? Explain and demonstrate with a graph.

Answer 1

A.
The first reason to bring benefit is that a building of a stadium, will attract the huge crowd that will create additional demand. It will boost the local economy and the local economy will expand to create new jobs. So, local people will get employment opportunities.
The second reason to bring benefit is that a building of a stadium will help the city to retain prevent the migration of their local young population to other cities. So, brain drain will stop and city will be served by the best local talents. Besides, the city of Sacramento will get popular to organization sports on a regular basis.
The third reason to bring loss is that there are already few stadiums and the city lack the infrastructure like road, raid and telecom to support its economy. Besides, the building of the stadium, will only create redistribution of jobs in the economy.

B.

Building of the stadium, requires labor force. So, demand for labor will increase and it will shift to the rightward direction as shown in the above graph. It will cause the wages to increase with the new quantity of labor at the new equilibrium.