In an economy in which labor is mobile and homogeneous, the wages between industries will be:
A) equal.
B) very unequal.
C) less in the export industry.
D) unequal because in some firms the management is fairer to its workers.

Question

Quizplus · Accepted Answer

In an economy with homogeneous and mobile labor, the labor market would be competitive and any wage differences across industries would be quickly arbitrated away. For example, if wages in one industry were higher than another, workers would migrate from the lower-paying industry to the higher-paying one, increasing labor supply in that industry and driving down its wages, while decreasing labor supply in the lower-paying industry and driving up its wages. Ultimately, this would lead to all industries paying the same wage rate for equivalent jobs. Therefore, the wages between industries would be equal.

In an Economy in Which Labor Is Mobile and Homogeneous