Suppose a government wants to decrease inequality in the society and thus introduces an education policy that leads to higher skills of the workers. How does this policy affects an equilibrium in the WS-PS model?

Question

Accepted Answer

Unemployment and inequality both decrease.

Accepted Answer

There is a higher average product of labor in the new equilibrium.

Answer

The WS curve shifts upwards.

Answer

The wage share of total production increases, thus decreasing inequality because workers not get a higher share of total production and owners get a lower share.

Crowdly

Suppose a government wants to decrease inequality in the society and thus introd...

Want instant access to all verified answers on moodle.vse.cz?