[economics] Two-sided model of unemployment question :) Unemployment Two-sided model:(c): In two-sided model, when a worker and firm are matched, what determines the wage paid tothe worker?Reference notes:Tow-sideed search model of Unemployment:• Let Q be interpreted as labor force, and MQ as those working age people not in the labor force.• Let P (Q) define a supply curve for workers who choose to search for market work. Thus, P. (Q) represents the expected payoffto searching for market work that would induce Q consumers to search.expected ↑payoffbt elej-bQQ•If the expected payoff from searching is higher this induces more consumers to forego home production to search for market work.*Let A denote the number of active firms, which is the number that choose to post vacancies.• Letk denotes the cost of firms for recruiting workers.Equilibrium•The worker will receive a surplus of w- b. the firm's surplus is z- un which is the profit the farm makes. Then, if we add theworker's surplus and the firm's surplus, we obtain total surplus, which is z - b.a represents the bargaining power of the worker..w-b= a(z-b) ⇒w= a(z-b) +ba1-aWworker surplus firm surplus.• P₁a) = 6 + ex(1. j)a(z-b).k• em ( + 1) = (1-A) (2-6)• Unemployment rate : 4 = 2(1-2)AL1-902• Jacconcy rate : v=1= 1- em(1.3)Pias9 = (1-4)2-1= 1- em-em ( F.1).QPia) = 6 + em(1. j)a(z-b)_eal f.11.

A two-sided model refers to a model in which there are two distinct groups or agents that interact…

Answered: (c): In two-sided model, when a worker…

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(c): In two-sided model, when a worker and firm are matched, what determines the wage paid to the worker?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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