Construction jobs in New Chongqing pay $20 per hour. The job isn’t that safe: a lot of sharp objects, a lot of ways to fall off a building. The city council of New Chongqing decides to set some job safety regulations for the construction industry. Let’s assume that the government enforces these new regulations effectively and fairly, so that half as many workers get hurt on the job. Let’s also assume that the city council makes the taxpayers pay the cost of making these jobs safer, so there’s no noticeable shift in the labor demand curve.
a. After these new job safety regulations come into effect, will workers be more willing to take these jobs than before or less willing than before?
b. Is that like a rise in the supply of labor or like a fall in the supply of labor?
c. Let’s put it all together: What will these job safety regulations do to the wage for construction jobs in New Chongqing?
d. What principle from this chapter does this illustrate?
e. In the United States, OSHA doesn’t make the taxpayers pay the cost of making the jobs safer. Instead, OSHA requires employers to spend the money themselves to make their firm’s jobs safer. Thus, OSHA requirements work like a tax on labor demand. What would this probably do to the demand curve for construction labor: Would it increase or decrease construction labor demand?