Question: Suppose that there is a technological change that makes workers more productive and reduces the cost of recruiting workers for firms (i.e vacancy cost decreases).

Suppose that there is a technological change that makes workers more productive and reduces the cost of recruiting workers for firms (i.e vacancy cost decreases). Using the DMP model, determine the effects of such a technological change on the unemployment rate, vacancy rate, wage, labor force, employment, output and labor market tightness. Explain your results.

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