Labour markets are beginning to stabilize after two years of
covid-related turbulence. The unemployment rate in England recently
dipped below 5 per cent, its pre-pandemic level.
a. Draw a typical supply & demand graph
for bartenders in England. Assume that at any wage the
substitution effect dominates the income effect. Mark the
equilibrium wage and the equilibrium employment. What is the
unemployment rate at the equilibrium wage rate?
b. Suppose we are told that there is unemployment in this
market and that bartenders are paid a minimum wage. Add a minimum
wage that is consistent with this claim. Show the unemployment on
your graph.
c. As England emerges from the pandemic, consumers
have increased their average spending on evenings out at
restaurants and bars. How will this affect the market for
bartenders? Explain any shifts in the supply & demand for
labour. Show graphically the new employment & unemployment at
the minimum wage. Assume there is still unemployment.
Labour markets are beginning to stabilize after two years of covid-related turbulence. The unemployment rate in England
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Labour markets are beginning to stabilize after two years of covid-related turbulence. The unemployment rate in England
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