Structural unemployment is sometimes said to result from a mismatch between the job skills that employers want and the job skills that workers have. To explore this idea, consider an economy with two industries: auto manufacturing and aircraft manufacturing.
a. If workers in these two industries require similar amounts of training, and if workers at the beginning of their careers can choose which industry to train for, what would you expect to happen to the wages in these two industries? How long would this process take? Explain.
b. Suppose that one day the economy opens itself to international trade and, as a result, starts
importing autos and exporting aircraft. What would happen to the demand for labor in these
c. Suppose that workers in one industry cannot be quickly retrained for the other. How would these
shifts in demand affect equilibrium wages both in the short run and in the long run?
d. If for some reason wages fail to adjust to the new equilibrium levels, what would occur?
Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $\$$4 per hour.
a. What effect does this employer mandate have on the demand for labor? (In answering this and
the following questions, be quantitative when you can.)
b. If employees place a value on this benefit exactly equal to its cost, what effect does this employer
mandate have on the supply of labor?
c. If the wage can freely adjust to balance supply and demand, how does this law affect the wage
and the level of employment? Are employers better or worse off? Are employees better or
d. Suppose that, before the mandate, the wage in this market was $\$$3 above the minimum wage. In this case, how does the employer mandate affect the wage, the level of employment, and the level of unemployment?
e. Now suppose that workers do not value the mandated benefit at all. How does this alternative
assumption change your answers to parts (b) and (c)?
um, question eight. Consider an economy with two labor markets, one for manufacturing and one for service workers. We're suppose initially that Nader is union guys and question, eh? If manufacturing workers formed a union white, what impact would you predict on the wages and unemployment in manufacturing? So one of the reason that workers form union you'd perform a union is to raise their wage. So suppose now the original wages. I'm sorry. This is the supplying the man could above labor market off manufacturing order, labor market. So suppose that original wages right here and manufacturing workers now form a union. So they want Teo fight for their rights. They want to ask for a higher wage to provide your family. So? So the new wage a strike for is higher. So this is going to cost this amount of manufacturing mortars to lose their jobs. So So So now we can answer a question. Be because basing that how would this changes in the manufacturing like the market affect the supply of labour in the market for service workers. So all so these unemployed I'm sory. So these are running point workers here. They him they have no choice but to look for other jobs. Right? So they will move to the service market service, worker markets, Teo work. So if the original supply ending man Kurt, look like this for a service walker things. Now we have more workers emigrated from the manufacturing world. We say that the supply off Walker's is going to increase. So this phenomenon is going to decrease the original wage. Since the group when we used to be here it so the rice off supply in labour is going to increase. A sari is going to decrease the wage, but increase the equilibrium equally. Graham quantity. Okay, that's it.