On 1 May 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the European Union. We are interested in analyzing the impact of this enlargement on wage inequality in Germany. Assume that Germany's labor market consists of two types of workers, low-skilled and high skilled workers. Also assume that Germany produces two types of goods, high-skill intensive manufacturing goods (cars) and low-skill intensive manufacturing goods (furniture).

3a) Wage inequality Eastern Europe's relatively low wages meant that it became Germany's "workbench", effectively reducing the relative price of low-skill intensive goods in Germany. How did the EU Eastern enlargement affect German wage inequality? (You may assume away factor intensity reversals and assume that both goods are produced in Germany.)