Equilibrium wages and employment levels in the two regions

Assignment Help Business Economics
Reference no: EM13769437

Consider an economy with two separate regions: A and B. There are 100 million workers in total who supply their labor in elastically. The demand for labor (in millions) in region A is EA = theta *100  15 wA and in region B it is .EB = theta *100  15 wB

a) Assume that initially theta = 1  and that the regional labor market has settled down to its long-run equilibrium. What are the equilibrium wages and employment levels in the two regions?

b) Now suppose that a positive demand shock strikes region A and that theta increases from theta = 1 to theta = 1.5.. i. Immediately after the shock, and before any migration takes place, what happens to the wages in the two regions? ii. What is the new long-run equilibrium? How many workers migrate from region B to A?

iii. Suppose that, like the Chinese government, the authorities attempt to restrict internal migration by issuing mobility permits. What is the outcome if the government provides only 10 million permits to region B's residents?

Reference no: EM13769437

Questions Cloud

Conventional stance regarding the use of absolute value : This is a point I find very confusing and very hard to justify to students. Depending on the books, one finds many different conventions regarding the sign of elasticities and marginal rate of substitution (MRS). Some define them taking absolute valu..
Does management monitoring become unethical : Do you believe managers are justified in monitoring employees and should managers always alert workers about monitoring?
What are the economic justifications of the size premium : What are the economic justifications of the size premium? In factor pricing models like the intertemportal capital asset pricing model (I-CAPM) or arbitrage pricing theory (APT), it is assumed that exposure to one of these factors represent exposure ..
Tax due to oligarchs heavy influence : How much the person should must get? And is it taken from any person who works in US? My country is paralyzed to impose this tax due to oligarchs heavy influence. I just wanted to gain some knowledge.
Equilibrium wages and employment levels in the two regions : Consider an economy with two separate regions: A and B. There are 100 million workers in total who supply their labor in elastically. The demand for labor (in millions) in region A is EA = theta *100  15 wA and in region B it is .EB = theta *100  15 ..
Evaluate the amount the hospital would report : Calculate the amount the hospital would report as net patient service revenue in its statement of operations for the fiscal year ending Sept. 30, 2011.
The world''s richest terrestrial ecosystems : People have had great influence on the biological diversity in their surrounding environment as a result of hunting.
Law of demand implies that when the price of a good rises : The law of demand implies that when the price of a good rises, people buy less of it. This makes the demand curve slope monotonically downwards. A textbook exception is the so-called Giffen good that by definition behaves in the opposite way.
Write a six page paper research paper on gay marriage : Write a six page paper Research Paper on Gay Marriage.

Reviews

Write a Review

 

Business Economics Questions & Answers

  Is profit per employee much sensitive to industry-specific

Interpret these results. Is profit per employee much sensitive to industry-specific or firm-specific factors for this sample of giant corporations.

  Desired proportions of capital and labor

Decrease will have on the desired proportions of capital and labor used in producing the given level of output at minimum total cost.

  Illustrate what is his reservation wage

Assume he takes welfare and does not work. Illustrate what is his reservation wage. He will not lose his welfare if he works.4. Suppose he is working and receives no welfare.

  More qualified and productive worker

It is always better to hire a more qualified and productive worker then a less qualified and productive one regardless of cost.

  Q1 assume that a leader country has real gdp per capita of

q1. assume that a leader country has real gdp per capita of 40000 whereas a follower country has a real gdp per capita

  Explain why might the private market not reach the socially

Explain why might the private market not reach the socially optimal level of traffic without the help of government.

  What are all producers assumed to maximize

What are all producers assumed to maximize?

  Explain what the government would have to do to keep

Open a Word document and insert the image by pressing the Ctrl+V keys simultaneously. Give reasons to explain what the government would have to do to keep the unemployment rate at 3 percent

  What interest rate will the maximum number of housing starts

for what interest rate will the maximum number of housing starts be achieved?

  Elucidate in writing to what market your derivation

Be sure to label all axis and curves on your graphs. Elucidate in writing to what market your derivation brings equilibrium and how it accomplishes this.

  Rate of return would the firm earn in its asset base

Illustrate what output would be produced, Illustrate what would total profits be also Illustrate what rate of return would the firm earn in its asset base.

  Health conditions in american schools

Many are concerned about health conditions in American schools, particularly since children frequently catch infectious diseases from each other. One child with an illness might give the disease to all of the others at

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd