Question: Consider the market for software engineers. Suppose there is a decrease in labor demand. We assume the following: . It takes time to produce

Consider the market for software engineers. Suppose there is a decrease in labor demand. We assume the following: . It takes time to produce a software engineer. Agents decide to become software engineers before entering the labor market. They make the decision based on running wages in different occupation at time of school choice. What happens to equilibrium wages and employment in short run and long run as a result of the decrease in demand? Draw and explain all the steps. How does your answer change if we assume that agents have rational expectations?

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