Question

A construction firm builds using two types of labor. The first is more skilled union workers, and the second is lesser skilled non-union workers. 8. a Would you expect the equilibrium wage to be the same or different of each type of worker. Briefly explain b) On separate graphs, show the equilibrium wage and employment for each type of worker Part of the compensation for union workers consists of health care benefits. These benefits cost the firm S1 per hour. Currently, health benefits are not available to non union workers. Suppose the government would like to make health care available to more people. In order to raise revenue, they impose a $1 tax on all workers not currently covered by the firms c refly describe the effects of this tax on the market for non-union workers.

Answer 1

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A)

The equilibrium will be different for each type of worker because worker with higher skill demand higher wages because they are more productive than unskilled one.

On the firm's side, firm pay wages based on productivity and have greater demand for skilled labor and supply is less for the skilled worker than unskilled one because of education and training cost incurred to attain particular skill.

C)

Health care benefit protects employees who work for firms that provide no fringe benefit. It will force employees to purchase benefits (via paying taxes) and receive lower wages. Therefore, the labor supply will fall.