Consider the labour markets for skilled labour and unskilled labour. The labour demand curve for skilled workers is given by w = e(150 - 5L)/100. The labour demand curve for unskilled workers is w = 50 - 2L. The labour supply for each of the two labour markets is given by L = 20. The effort of firm's skilled workers depends on their wage according to the following schedule: wage (w) 20 25 30 35 40 45 Effort (e) 16 24 30 34 36 36 a) Calculate the equilibrium employment, unemployment, and wage for unskilled workers. b) Calculate the profit-maximizing contract (w,e). c) Calculate the equilibrium employment, unemployment, and wage for skilled workers. d) In a single labeled graph in (w - L), illustrate the labour market equilibria for skilled and unskilled workers. e) Calculate the cumulative income distribution for each labour market by reporting the cumulative shares for the following percentiles: 50% and 100%. f) In a single graph, construct the Lorenz curve representing labour income inequality for each labour market. Construct the cumulative shares for the following percentiles: 50% and 100%. g) Briefly explain why the declining share of labour income in recent decades could entirely be attributed to the shae of the labour supply curve. h) Briefly explain why the temporary foreign workers program run by the federal government influences the shape of the labour supply curve but the permanent residents program does not.
Consider the labour markets for skilled labour and unskilled labour.
The labour demand curve for skilled workers is given by w = e(150 - 5L)/100. The labour demand curve for unskilled workers is w = 50 - 2L. The labour supply for each of the two labour markets is given by L = 20.
The effort of firm's skilled workers depends on their wage according to the following schedule:
| wage (w) | 20 | 25 | 30 | 35 | 40 | 45 |
| Effort (e) | 16 | 24 | 30 | 34 | 36 | 36 |
a) Calculate the equilibrium employment,
b) Calculate the profit-maximizing contract (w,e).
c) Calculate the equilibrium employment, unemployment, and wage for skilled workers.
d) In a single labeled graph in (w - L), illustrate the labour market equilibria for skilled and unskilled workers.
e) Calculate the cumulative income distribution for each labour market by reporting the cumulative shares for the following percentiles: 50% and 100%.
f) In a single graph, construct the Lorenz curve representing labour income inequality for each labour market. Construct the cumulative shares for the following percentiles: 50% and 100%.
g) Briefly explain why the declining share of labour income in recent decades could entirely be attributed to the shae of the labour supply curve.
h) Briefly explain why the temporary foreign workers program run by the federal government influences the shape of the labour supply curve but the permanent residents program does not.
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