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ProblemSet_3 - 1 ILRLE 240 Economics of Wages Employment...

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CONTINUED 1 ILRLE 240: Economics of Wages & Employment Professor Matthew Freedman Fall 2008 Problem Set III 1. Offices have become substantially more computerized over the past several decades as faster, more powerful machines have become increasingly affordable. Some observers have attributed declines in the employment of some types of office workers, and in particular low- skilled office staff, to the rise in workplace computerization in the U.S. Is it necessarily the case that cheaper computers will result in fewer office jobs? Explain. 2. Suppose that there are 50 retail stores in Ithaca, each of which operates in a perfectly competitive product market and a perfectly competitive labor market. (a) Describe the labor supply curve facing each individual retailer in Ithaca. (b) Suppose that 10 of the 50 retailers in Ithaca are type A firms and that the remaining 40 are type B firms. Owing to differences in the technologies they use, type A firms employ 10 workers at the going wage, while type B firms employ 20. Calculate total employment in the retail industry in Ithaca. (c) If the real wage for workers were to increase, could we say conclusively that employment at a given retailer in Ithaca would fall? Could we say conclusively that employment in the retail industry as a whole in Ithaca would fall? Explain.
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