Structural unemployment is sometimes said toresult from a mismatch between the job skills thatemployers want and the job skills that workers have.To explore this idea, consider an economy withtwo industries: auto manufacturing and aircraftmanufacturing.a. If workers in these two industries requiresimilar amounts of training, and if workers atthe beginning of their careers can choose whichindustry to train for, what would you expect tohappen to the wages in these two industries? Howlong would this process take? Explain.b. Suppose that one day the economy opens itselfto international trade and, as a result, startsimporting autos and exporting aircraft. Whatwould happen to the demand for labor in thesetwo industries?c. Suppose that workers in one industry cannot bequickly retrained for the other. How would theseshifts in demand affect equilibrium wages both inthe short run and in the long run?d. If for some reason wages fail to adjust to the newequilibrium levels, what would occur?
Structural
result from a mismatch between the job skills that
employers want and the job skills that workers have.
To explore this idea, consider an economy with
two industries: auto manufacturing and aircraft
manufacturing.
a. If workers in these two industries require
similar amounts of training, and if workers at
the beginning of their careers can choose which
industry to train for, what would you expect to
happen to the wages in these two industries? How
long would this process take? Explain.
b. Suppose that one day the economy opens itself
to international trade and, as a result, starts
importing autos and exporting aircraft. What
would happen to the demand for labor in these
two industries?
c. Suppose that workers in one industry cannot be
quickly retrained for the other. How would these
shifts in demand affect equilibrium wages both in
the short run and in the long run?
d. If for some reason wages fail to adjust to the new
equilibrium levels, what would occur?
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