The citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Robbinsville ________ and the labor supply in Deville to ________.

Question

Quizplus · Accepted Answer

If the wages in Deville are higher, the citizens of Robbinsville will have an incentive to leave Robbinsville and find work in Deville, causing the labor supply in Robbinsville to decrease (shift left). At the same time, the higher wages in Deville will attract more workers from outside of Deville to come and work in Deville, causing the labor supply in Deville to increase (shift right). Therefore, we would expect a leftward shift of the labor supply curve in Robbinsville and a rightward shift of the labor supply curve in Deville.

The Citizens of Robbinsville Notice That Their Friends and Family