In the two-sided search model, if the worker share of total surplus goes up: Group of answer choices There is a shift leftwards of the labor demand curve to lower market tightness (j) There is a movement along the labor demand curve to a lower market tightness (j) There is a shift upwards and to the left of the labor supply curve to lower market tightness All of these things will happen
Added by Antonio V.
Step 1
Let j denote market tightness (vacancies per unemployed). Let q(j) be the job-filling rate of a vacancy (q' < 0). Firms pay a flow vacancy cost c, a filled job produces output y and pays wage w, and matches separate at rate s. Firms post vacancies under free Show more…
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