In the labor market, an increase in labor productivity the real wage rate and the level of employment.

Question

Quizplus · Accepted Answer

An increase in labor productivity means workers are producing more output per hour, which leads to higher profits for firms. This allows firms to pay higher wages without increasing their costs, which in turn attracts more workers to the labor market. As the supply of labor increases, the level of employment also increases. Therefore, an increase in labor productivity raises both the real wage rate and the level of employment.

In the Labor Market, an Increase in Labor Productivity the Real