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In the labour market, suppose one-half of the labour supply has high skills and the other half has low skills. This means that the short
In the labour market, suppose one-half of the labour supply has high skills and the other half has low skills. This means that the short run labour supply curve is vertical for the highly skilled at 0.5. The demand for highly skilled workers is W=60-30F, where W is the wage premium to the skilled workers and F is the fraction of workers who are skilled. The wage premium is measured in percentages. What is the wage premium to the skilled workers in the short run?
a. 45%
b. 60%
c. 75%
d. 30%
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