Question

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1. Suppose during the first year of the new administration, several events occur: Consumer demand for clothing increases OSHA rescinds costly worker safety regulations that had no impact on worker productivity in labor market for clothing production . Prices for capital used in producing output in the clothing market fall . Immigration of workers suitable for employment in the clothing market slows Wages in market X- which requires workers with the same traits and skills as workers in the clothing market -rise . American students organize a boycott of clothing produced in foreign 'sweat shops' Briefly explain the long-term effects each will have on both wages and employment levels in the domestic clothing labor market

Answer 1

1 Due to increase in consumer demand for clothing, this will increase demand for labor to satisfy this increased demand and this will increase the employment levels and due to this increase in demand for labor, labor wages will also get increased, Due to labor demand will be more than its supply and demand and supply rule will apply on the same.

2 As OSHA rescinds costly worker safety regulations that had no impact on worker productivity in labor market for clothing production , This will increase the employment levels of the labor since clothing company will save lots of money which they had to spent on labor safety measures and due to increase in demand will also increase its wages rates.

3 Due to fall in prices of capital used in producing output in the clothing market, this will reduce capital cost for the clothing market/companies and due to this clothing market will save money and they will use that money to hire more workers, it means their employment levels will get increased and due to increase in demand for labor, their wages will also get increased from previous level.

4 Due to slow in immigration of workers suitable for employment in the clothing market will decrease the employment level of the these workers but their wage rates will get increased due to demand will be more than supply of workers.

5 As wages in market X for the workers for the same type of traits and skills which are employed in clothing market increases then employment level in the clothing market will get decreased due to less supply of workers from market X than demand but simultaneously wages will get increased due high demand than supply of workers.

6 Due to boycott by the American students of clothing produced by foreign sweat shops then this will increase demand for domestically produced clothing and for satisfying increased demand for clothing, clothing market/firms will demand for more workers and this will increase the employment levels in the clothing market and due to high demand than supply of workers this will increase the wages/wage rates for the clothing workers.