Innovation that increases the productivity of capital equipment will increase the demand for labor in the short run but decrease wages in the long run.

Question

Quizplus · Accepted Answer

Innovation that increases the productivity of capital equipment can increase the demand for labor if the innovation is complementary to labor, potentially increasing wages if the demand for labor shifts rightward more than the supply. In the long run, higher productivity can lead to economic growth, which can increase both the demand for labor and wages, contrary to the statement.

Innovation That Increases the Productivity of Capital Equipment Will Increase