Consider a Specific-Factors model. Two countries, Domestic and Foreign, A and B. Assume Domestic has LD...

 

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Consider a Specific-Factors model. Two countries, Domestic and Foreign, A and B. Assume Domestic has LD 100 workers. Domestic's marginal product of labor in both industries are: = MPLD,A = 2/√LD, A MPLD,B = 6/√LD,B (4) Suppose that the price of cookies is 3 and the price of hot chocolate is 3. Calculate the change in Domestic's real wage in terms of A if immigration causes Lp to rise to 140 (e.g., if the pre-immigration real wage is 2.0 and the post-immigration real wage is 1.5, your answer will be 1.5 - 2.0 = = -0.5). Consider a Specific-Factors model. Two countries, Domestic and Foreign, A and B. Assume Domestic has LD 100 workers. Domestic's marginal product of labor in both industries are: = MPLD,A = 2/√LD, A MPLD,B = 6/√LD,B (4) Suppose that the price of cookies is 3 and the price of hot chocolate is 3. Calculate the change in Domestic's real wage in terms of A if immigration causes Lp to rise to 140 (e.g., if the pre-immigration real wage is 2.0 and the post-immigration real wage is 1.5, your answer will be 1.5 - 2.0 = = -0.5).

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Domestic labor supply preimmigration LDA0 100 workers Marginal product of labor in industry A MPLDA ... View the full answer