Labor Economics

Task 1: Equilibrium in the Labor Market (c) Suppose that there are 10000 workers, and 100 firms. Derive the equilibrium wage and number of hours each worker works. Graph your answer. (2 Points) Task 2: Immigration and the New Equilibrium (b) Which group, domestic workers or immigrant workers, has more elastic labor supply? Why? Compute: As you deem appropriate, either (i) choose one wage, and then compute the elasticity for each group at that wage; or, (ii) choose two wages and then compute the elasticity for each group between those two wages. (4 Points) (c) Let there be 5000 immigrants with the same preferences as the domestic workers; however, for them, V = 0. Derive the new market labor supply and the new equilibrium wage. What changes have the domestic workers experienced, both to the number of hours that they work and to the wage that they receive? (4 Points)

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