A New York Times article published in 2007 observed that the wage of farm workers in Mexico was $11 an hour but the wage of immigrant Mexican farm workers in California was $9 an hour.
a. Assume that the output sells for the same price in the two countries. Does this imply that the marginal product of labor of farm workers is higher in Mexico or in California? Explain your answer, and illustrate with a diagram that shows the demand and supply curves for labor in the respective markets. In your diagram, assume that the quantity supplied of labor for any given wage rate is the same for Mexican farm workers as it is for immigrant Mexican farm workers in California.
b. Now suppose that formwork in Mexico is more arduous and more dangerous than formwork in California. As a result, the quantity supplied of labor for any given wage rate is not the same for Mexican farm workers as it is for immigrant Mexican farm workers in California. How does this change your answer to part a? What concept best accounts for the difference between wage rates for Mexican farm workers and immigrant Mexican farm workers in California?
c. Illustrate your answer to part b with a diagram. In this diagram, assume that the quantity of labor demanded for any given wage rate is the same for Mexican employers as it is for Californian employers.