Structural unemployment is sometimes said to result from a mismatch between the

Question

Structural unemployment is sometimes said to result from a mismatch between the job sklls that employers want and the job akils that workers have To explore this ideac consider an economy with two industries: auto manufacturing and aircraft manufacturing Assume that workers in these two industries require similar amounts of tr their careers. aining, and they can choose which industry to train for at the beginning of True or False: Wages in the auto manufacturing industry would be less than those in the aircraft manufacturing industry O True O False exporting areraft Suppose that one day the economy opens itself to international trade and, as a result, starts importing autos and and the demand for labor in the aircraft manufacturing This would cause the demand for labor in the auto manufacturing industry to industry to . Suppose that workers in one industry cannot be quickly retrained for the other Which of the following accurately describes the effects of the shifts in demand on the equilbrium wages in the two industres? Check a that apply wages in the auto industry would rise in the short run Type here to search

Explanation / Answer

False.

As the workers in these two industries require similar amount of training so wages should be same in both industries.

This would cause the demand for labour in the auto manufacturing industry to decrease and the demand for labour in the aircraft manufacturing industry to increase.

Wages in the aircraft industry would rise in the short run because demand for labour increases which increases the wages of workers.

There will be surplus of workers in the auto manufacturing industry and shortage of workers in the aircraft industry.

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