In June 2020, the Egyptian national airline carrier announced a considerable reduction in the prices of domestic flights with the aim to promote domestic tourism. This is expected to increase the economic activity of several Egyptian cities that were negatively impacted by the suspension of international as well as national tourism movements caused by COVID-19 pandemic. Aswan is one of the cities to benefit from this price reduction. a) With the aid of illustrative graphs, explain the impact of this decision on the labour market of Aswan, especially on the rates of unemployment and labour market equilibrium. b) Assume that Luxor city has been excluded from this decision by the national airline carrier. Discuss whether it's labour market outcomes would still be impacted by it? c) Do you expect that the wages of workers- that has the same skills and productivity - will be the same in both cities?

In June 2020, the Egyptian national airline carrier announced a considerable reduction in the prices of domestic flights with the aim to promote domestic tourism. This is expected to increase the economic activity of several Egyptian cities that were negatively impacted by the suspension of international as well as national tourism movements caused by COVID-19 pandemic. Aswan is one of the cities to benefit from this price reduction. a) With the aid of illustrative graphs, explain the impact of this decision on the labour market of Aswan, especially on the rates of unemployment and labour market equilibrium. b) Assume that Luxor city has been excluded from this decision by the national airline carrier. Discuss whether it's labour market outcomes would still be impacted by it? c) Do you expect that the wages of workers- that has the same skills and productivity - will be the same in both cities?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter26: Factor Markets: With Emphasis On The Labor Market

Section: Chapter Questions

Problem 16QP

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