21109 - ILRIC6350 02/11/09 Topic: Labor Market Modeling...

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ILRIC6350 – 02/11/09 Topic: Labor Market Modeling Another example – Public Policy Formation Exams will be ready next week. Question: When economic growth takes place, how do labor market conditions change? Taiwan: most of the labor market variables did change, in a direction implying that there is higher economic well-being for workers, and increases in real earnings adjusted for inflation. That is an example of a country where economic growth takes place and conditions improved. In general what we know is that when econ. growth takes place, workers do benefit. The pessimistic view that economic growth enriches everyone but the poor is untrue in the developing country (but is true in the United States) In the core labor market model, there is an upward sloping supply curve and a downward sloping demand curve. The wage W* is set by supply and demand. The point of crossing here is both an equilibrium and market clearing. In the core labor market model, those three forces (workers deciding when and where to work,
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