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There are two types of workers in the labor market: A and B. Firms are prejudiced against worker B, and the degree of prejudice is
There are two types of workers in the labor market: A and B. Firms are prejudiced against worker B, and the degree of prejudice is indicated by di . What happen to the equilibrium relative wage and employment for worker B if : (a): di decreases, and at the same time, the labor supply of worker B increases? Explain with a graph and list all possible outcomes. (b): the share of non-prejudiced firms increases, and at the same time, the labor supply of worker B decreases? Explain with a graph and list all possible outcomes.
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