Initially, all workers are paid a wage of w1 per hour. The government taxes the cost of

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Initially, all workers are paid a wage of w1 per hour. The government taxes the cost of labor by t per hour only in the "covered" sector of the economy. That is, if the wage workers receive in the covered sector is w2 per hour, firms pay w2 + t per hour. Show how the wages in the covered and uncovered sectors are determined in the post-tax equilibrium. Compared to the pre-tax equilibrium, what happens to total employment, L, employment in the covered sector, Lc, and employment in the uncovered sector, Lu?
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