How can competition in a scarce labor market affect wages?
Wages will go down because productivity is lower.
Wages will remain level because firms want to keep existing workers.
Wages will go up to attract workers to a firm and to keep existing workers.
Wages will go down to discourage new, nonskilled labor from entering the labor force.
My answer is the 1st one - productivity is lower
3 answers
No -- that doesn't make any sense. Why wouldn't employers raise wages in order to attract more workers?
You are absolutely correct -- thank you
You're welcome.
1 answer