Question: ( 2 0 points ) Suppose that there is a technological change that reduces the cost of recruiting for firms ( in other words, the

(20

points

)

Suppose that there is a technological change that reduces the cost of recruiting for firms

(

in other words, the cost of posting vacancies falls

) .

Using the two sided search model we discussed in class, determine the effects on the labor market tightness, the unemployment rate, the vacancy rate, the labor force, and aggregate output. Use diagrams and explain your results.

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