After you have studied Economics in the News on pp. 504–505, answer the following questions.

a. What information in the news article is consistent with the view that Covid-19 restrictions brought increased inequality?

b. If college tuition was free and more people got degrees in computer programming, how would the wage gap between programmers and retail sales clerks change?

c. Draw a graph to illustrate your answer to (b).

Transcribed Image Text:

ECONOMIC ANALYSIS The news article reports that the gap between top incomes and bottom incomes widened during the Co- vid-19 pandemic. You can understand the forces that have brought the increased inequality by applying the model that you saw on pp. 497-498 modified to incorporate a minimum wage law that you saw in Chapter 6, pp. 173-175. Figure 1 illustrates the job market for retail sales clerks in California, an example of low-skilled workers, who were hit hardest by social restrictions to fight the pandemic. In 2019, the demand for these workers, derived from their value of marginal product, was LDO- The minimum wage rate in California is $14 an hour and is shown by the horizontal line. Wage rate (dollars per hour) 16 A 13 12 11 1 ... and brought unemployment 2 Covid-19 restrictions decreased the demand for retail sales clerks, ... 3 4 5 LD LS Figure 1 The Job Market for Retail Sales Clerks Minimum wage LDO 6 7 8 9 10 Employment (millions of workers)