題組內容

We usually observe that the less educated workers tend to hold manual and service occupations. Besides, the unemployment rate for the less educated workers is found to be higher than that for more educated workers. Furthermore, the less educated were found to be hurt the most in terms of job loss during the COVID-19 pandemic.

(f) (5%) Up so far, we have assumed that workers have no mobility across sectors. In reality, it is costly for workers to switch sectors. Discuss what could prevent workers from switching sectors. Formulate your answer by writing down an equation (equations) for a worker to be indifferent between switching across sectors.