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1.5 Initially, all workers are paid a wage of w, per hour. The government taxes the cost of labor by f per hour only in
1.5 Initially, all workers are paid a wage of w, per hour. The government taxes the cost of labor by f per hour only in the "covered" sector of the economy. That is, if the wage workers receive in the covered sector is w, per hour, firms pay w, + + per hour. Show how the wages in the covered and uncovered sectors are determined in the post-tax equilibrium. Compared to the pre-tax equilibrium, what happens to total employment, L, employment in the covered sector, L., and employment in the uncovered sector, L
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