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Opt for Asymmetric Information in Labor Markets Homework Help and Clarify Your Doubts! 

Asymmetric information is a topic that you will get to study in the subject of economics, and one of its aspects is asymmetric information in the labor markets. It is a detailed topic, and there are so many things covered under it which may create confusion in your mind. So if you don’t wish to waste your time as well as efforts, then it’s high time that you should go for asymmetric information in labor markets homework help.

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What is Asymmetric Information in Labor Markets all about?

Asymmetric information is the case when one party in a transaction is having greater information and knowledge as compared to the other party. Sometimes it is also called as information failure. Generally it is assumed that in a perfectly competitive market there is no information asymmetry. But this assumption does not hold true in real life scenarios. In any type of market, you will observe information asymmetry at some or the other level.

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 Case studies to note

When new labor is joining

Like the other markets, information asymmetry can also be found in labor market. A new laborer may not be having any idea about the industrial practices, and when he will go to find a job and then there are chances that the employer may exploit him by paying less money, making him work for longer hours or by providing unsuitable conditions of working. Such a case may occur only when the worker has no idea about the norms of working whereas the employer may have full information about the industrial practices.

Labor having specialized knowledge

Another case can be where the laborers are having specialized information and exceptional knowledge, but the employer is not having that level of information. In this case,because the workers are possessing specialized information then they can enjoy economic gains by charging more money from the employer.

Skilled and unskilled labor

Sometimes there can be a case where the employer may be unable to distinguish between the productivity of skilled and unskilled laborers due to lack of information and thus may pay on an average basis. It is beneficial for unskilled laborers but not for the skilled ones.

Principal agent problem

Principal agent problem is also seen in labor market due to asymmetric information. If the agent is having specialized knowledge which the principal does not possess, then in such a case he can misuse his powers, and the principal therefore may have to compensate the agent to work for his interests with incentives.

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