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Use the general equilibrium analysis to explain why barbers earn higher real wages now than in...

Use the general equilibrium analysis to explain why barbers earn higher real wages now than in 1900, even though there has been little technological progress in the industry.

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Answer #1

Barbers earn higher wages now than in 1900 even though there has been little technological progress in the industry because there has been an overall rise in the wage rate in the labor market which has slso impacted the wage rate in the market for barber. Also as compared to 1900, demand for barbers has increased and supply has also shifted rightwards. Since this is a general equilibrium approach, thus, impact of the rise in the wage rate in labor market has also impacted wage rate in the market for barber and thus wage rate has also risen in market for barber.

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