10.15. Consider the model of Section 10.6. (a) Use equations (10.65) and (10.69), together with the fact...
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10.15. Consider the model of Section 10.6.
(a) Use equations (10.65) and (10.69), together with the fact that VV = 0 in equilibrium, to find an expression for E as a function of the wage and exogenous parameters of the model.
(b) Show that the impact of a rise in y on E is greater if w remains fixed than if it adjusts so that VE − VU remains equal to VF − VV .
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