Describe how each of the following changes would affect the equilibrium in the labor market in terms of the level of the real wage and quantity of employment in equilibrium:

(a) Increased immigration leads to higher labor supply at each real wage
(b) The effort curve makes a parallel shift upward
(c) Labor productivity increases (that is, the marginal product of labor increases at each level of employment).

(a) The increase in labor supply does not affect the effort curve, so does not affect the efficiency wage. Thus there is no effect on the equilibrium real wage or employment.
(b) The upward shift of the effort curve increases in efficiency wage; but with the marginal product of labor unchanged, the real wage increases and level of employment declines.
(c) The higher marginal product of labor shifts the labor demand curve to the right, increasing the equilibrium level of employment. The real wage does not change because there is no change in the effort curve.