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    U.S. firms can outsource technical support jobs to India where labor is cheaper, shown by a shift from the labor demand curve D to D2. This is because improved communication technologies allow U.S. companies to substitute higher-wage American workers for lower-wage Indian workers. As a result, the wage for U.S. technical support workers drops from $19/hour to the new equilibrium wage at E2 as the quantity of U.S. workers falls.

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    graph progression 3

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    U.S. firms can outsource technical support jobs to India where labor is cheaper, shown by a shift from the labor demand curve D to D2. This is because improved communication technologies allow U.S. companies to substitute higher-wage American workers for lower-wage Indian workers. As a result, the wage for U.S. technical support workers drops from $19/hour to the new equilibrium wage at E2 as the quantity of U.S. workers falls.

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    56 views3 pages

    Graph Progression 3

    Uploaded by

    api-509499602
    U.S. firms can outsource technical support jobs to India where labor is cheaper, shown by a shift from the labor demand curve D to D2. This is because improved communication technologies allow U.S. companies to substitute higher-wage American workers for lower-wage Indian workers. As a result, the wage for U.S. technical support workers drops from $19/hour to the new equilibrium wage at E2 as the quantity of U.S. workers falls.

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    © All Rights Reserved
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    of 3

    GRAPH PROGRESSION 3

    L A B O R O U T S O U RC I N G A N D WA G E

    Shante Carter
    Econ 202
    U.S. workers providing technical support for customers of U.S. manufactures of digital devices
    making $19 per hour

    Wage Rate ($ per hour) S

    19
    ……………………………………….. E1 .
    …………………………………..….. D

    Quantity of Labor (number of workers)


    Improvements in communications technologies enable U.S. firms to substitute
    away from U.S. workers in favor of Indian workers

    Wage Rate ($ per hour) S

    19
    ……………………………………….. E1 .
    .
    …………………………………..…..
    …………………………………… E2

    …………………………………..
    D

    D2

    Quantity of Labor (number of workers)

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