Assume there are only two cities in a region, ManchesterCity (MC) vs. LeicesterCity (LC), identically populated. Moreover, further assume that there are only manufacturing jobs in MC, and only high-skilled idea-based industry jobs in LC.
Assume there are only two cities in a region, ManchesterCity (MC)
vs. LeicesterCity (LC), identically populated. Moreover, further assume that there are only manufacturing jobs in MC, and only high-skilled idea-based industry jobs in LC.
a.How would you expect the labor demand curves to differ (if any) between the two cities?Why?
b.All else being equal, over-time, would you expect to see more volatility of unemployment rates in LC vs MC? (Assume identical labor supply curves). Explain your answer.
c. If due to structural changes, 1 million people move from LC to MC, how would that affect the wages in each city? Compare the sign and the magnitude the change in wagesand equilibrium employment-in both cities, and show your work on a graph(Assume identical Labor supply curve before migration).
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