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3. (Note: You should wait to tackle this question until after lecture on Tuesday, February 28.) Consider the markets for "low-skilled" and "high-skilled" labor (as economists use those terms). How would you expect each of the following developments to affect the employment and wages of low-skilled and of high-skilled workers, and what would expect to be the impact on income inequality? a. There is increased demand for apps and smart appliances, which are produced by high-skilled workers. b. The government pays employers a subsidy for each low-skilled worker they employ. c. Some low-skilled workers get more education, and so become high-skilled workers.

          3. (Note: You should wait to tackle this question until after lecture on Tuesday, February 28.) Consider the markets for "low-skilled" and "high-skilled" labor (as economists use those terms). How would you expect each of the following developments to affect the employment and wages of low-skilled and of high-skilled workers, and what would expect to be the impact on income inequality?
a. There is increased demand for apps and smart appliances, which are produced by high-skilled workers.
b. The government pays employers a subsidy for each low-skilled worker they employ.
c. Some low-skilled workers get more education, and so become high-skilled workers.

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3. (Note: You should wait to tackle this question until after lecture on Tuesday, February 28.) Consider the markets for "low-skilled" and "high-skilled" labor (as economists use those terms). How would you expect each of the following developments to affect the employment and wages of low-skilled and of high-skilled workers, and what would expect to be the impact on income inequality?
a. There is increased demand for apps and smart appliances, which are produced by high-skilled workers.
b. The government pays employers a subsidy for each low-skilled worker they employ.
c. Some low-skilled workers get more education, and so become high-skilled workers.

Added by Leeahnie A.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Andrew Davis

03/04/2023

Step 1

Step 1: Draw two labor markets for low skill labor and high skill labor, with demand and supply curves for each. Show more…

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3. (Note: You should wait to tackle this question until after lecture on Tuesday, February 28.) Consider the markets for "low-skilled" and "high-skilled" labor (as economists use those terms). How would you expect each of the following developments to affect the employment and wages of low-skilled and of high-skilled workers, and what would expect to be the impact on income inequality? a. There is increased demand for apps and smart appliances, which are produced by high-skilled workers. b. The government pays employers a subsidy for each low-skilled worker they employ. c. Some low-skilled workers get more education, and so become high-skilled workers.

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Transcript

00:01 So here we're talking labor markets, and that means that i should always draw two labor markets, right? so i'm going to set it up like this.

00:09 We have a market for low -skill labor.

00:11 We have a market for high -skill labor.

00:13 Labor markets are between the wage and the amount of labor.

00:18 We've got demand and supply in each of these markets.

00:22 And now we're going to have the story.

00:24 So what we need to do is to map the story into the model, right? so here we have increased demand for high -skill labor.

00:39 So the demand curve for high -skill labor is going to increase, right? and when the demand curve for high -skill labor is increasing, you are getting higher wages, right? so wage up and labor up for high -skill, and that means higher inequality, right? now, if you want it to be really fancy, you could talk about there being some degree of substitution between high school labor and low -skill labor.

01:18 I'm assuming here when i do this, no substitution.

01:22 Because if there is substitution, when the price of high -skilled labor goes up, firms will start trying to replace some high -skilled labor with some low -skilled labor, and then you've got a much, much more complicated story, right? so i'm assuming no substitution between high - and low -skilled labor.

01:38 Should probably make that clear to your instructor.

01:42 So let's do the other two by redrawing the same and see if i could do these a little bit faster...

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