Referring to the output and substitution effects, explain why an increase in the wage rate for autoworkers

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Referring to the output and substitution effects, explain why an increase in the wage rate for autoworkers will generate more of a negative employment response in the long run than in the short run. Assume there is no productivity increase and no change in the price of nonlabor resources.

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Contemporary Labor Economics

ISBN: 978-1259290602

11th Edition

Authors: Campbell R. McConnell, Stanley L. Brue, David Macpherson

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