Question: Suppose there exist two labour markets one for low-skilled, and one for high-skilled workers. Any low-skilled worker can become a high-skilled worker by investing in

Suppose there exist two labour markets one for low-skilled, and one for high-skilled workers. Any low-skilled worker can become a high-skilled worker by investing in education, the cost of which is c.

Now suppose that an improvement in technology reduces the demand for low-skilled workers. Explain the process by which the two labour markets would adjust to a new equilibrium?

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