The bucket diagram below represents the World labor market. Suppose that initially the distribution of the...
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The bucket diagram below represents the World labor market. Suppose that initially the distribution of the World amount of labour is given by L, and wages at Home and Foreign are w and w*, respectively. W W w* 0 L→ L B Foreign wage Home wage World amount of labour EL O* Now, consider a situation where some Foreign workers migrate to Home but not enough to reach the equilibrium with full migration (point B). a. Explain below in words what happens to wages in Home and Foreign. In the bucket diagram, clearly label the new World allocation of labour L', and the new wage values in Home and Foreign, w' and w*', respectively. b. Use the bucket diagram above to discuss and identify the economic benefits and costs of immigrants to Home. c. Does Home gain from immigration overall? If so, clearly identify the area representing these gains in the bucket diagram above. If not, explain why not. The bucket diagram below represents the World labor market. Suppose that initially the distribution of the World amount of labour is given by L, and wages at Home and Foreign are w and w*, respectively. W W w* 0 L→ L B Foreign wage Home wage World amount of labour EL O* Now, consider a situation where some Foreign workers migrate to Home but not enough to reach the equilibrium with full migration (point B). a. Explain below in words what happens to wages in Home and Foreign. In the bucket diagram, clearly label the new World allocation of labour L', and the new wage values in Home and Foreign, w' and w*', respectively. b. Use the bucket diagram above to discuss and identify the economic benefits and costs of immigrants to Home. c. Does Home gain from immigration overall? If so, clearly identify the area representing these gains in the bucket diagram above. If not, explain why not.
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Immigration takes place between countries when the world wage rates are different or higher from hom... View the full answer
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
Posted Date:
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