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 select (6) scenarios, (I HAVE 5 already) that would cause a shift in labor supply and demand

Economics Sep 10, 2020

 select (6) scenarios, (I HAVE 5 already) that would cause a shift in labor supply and demand. The following areas have had high job growth rates and can be used for a scenario: transportation, insurance, and real estate industries. Please focus on the following questions:

1) What is the area of employment?
2) Why has the shift occurred?
3) In what direction would the shift in labor supply and demand go?
4) What would be its effect on the equilibrium of the labor market?

Expert Solution

Globalization has increased the demand for transportation. Globalization involves greater specialization in production within each nation, and longer distances over which goods must be transported. E-commerce may also be a factor in this regard. Orders placed over the internet require specialized freight handling, while good purchased consumers going directly to the store require less (products must still be delivered to the store, but it is done in bulk so it is more efficient).

Thus the demand curve for labor has shifted to the right. Some of this demand can be taken up by unemployed workers. However, if demand is high enough, wages will need to rise in the freight industry in order to attract more workers. The equilibrium wage will therefore be higher because of globalization. The supply curve for workers will not shift outward unless population increases. This would change the equilibrium again, bringing the wage back down. However increased population would also increase the demand for shipping, beginning the cycle anew.

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