Question

Suppose there is an increase in the average education level of the population. You would expect the equilibrium wage to increase and the equilibrium quantity of labor employed to increase . Please answer increase, decrease, or uncertain.

Answer 1

Both equilibrium wage and equilibrium quantity of labor employed are expected to increase.

Step-by-step explanation:

Increase in average education level means there are more skilled workers. High-skilled labors often take the production of high-level products/services internationally or create new products/services. The value of output will increase, technical know-how and capital will accumulate.

That creates more work for lowe-skilled labor and incrase their productivity (imagine having better machine to clean the office of a new business of a group of young founders)

Increased productivity and more work to be done will increase both wage and employment.