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 makes workers more valuable to employers because they can produce more goods or services per hour worked. This typically leads to higher real wages as employers are willing to pay more for more productive labor. Additionally, higher productivity can lead to an increase in the level of employment as businesses expand due to the higher output and potentially increased demand for their more efficiently produced goods and services.

In the Labor Market, an Increase in Labor Productivity ________