Recently, France's government has proposed to raise the retirement age from 62 to 64. Assume that a Cobb-Douglas production function is a good representation of France's economy, the substitution effect is stronger than the income effect, and that the economy was initially at equilibrium. Assuming all else is held constant, if the real wage is completely flexible, what will happen to the equilibrium real wage rate and quantity of labor if the legislation is passed?

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Impact of French Retirement Age Increase on Labor Market Assuming your description of the economic situation and the policy change is accurateheres wh... View the full answer