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Consider two separate labor markets, one for skilled workers and one for unskilled workers. Both markets are initially in equilibrium (with ds LL = in
Consider two separate labor markets, one for skilled workers and one for unskilled workers. Both markets are initially in equilibrium (with ds LL = in each market) such that the wage for skilled labor exceeds the wage for unskilled labor. Analyze the impact of the following changes on (i) the equilibrium wage in each market, (ii) the equilibrium level of employment in each sector, and (iii) the level of inequality: (a) An increase in the supply of unskilled labor and a decrease in the supply of skilled labor. (b) An increase in the demand for skilled labor and a decrease in the demand for unskilled labor
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