Problem 1: Illustrate the effects of a migration flow of unskilled workers from the South to...

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Problem 1: Illustrate the effects of a migration flow of unskilled workers from the South to the North on two graphs that depict the (downward-sloping) relative demand for skilled to unskilled labor, RDSL, and the relative supply of skilled to unskilled labor, RS SL, in the North and in the South. Assume that the North and the South produce one good only using skilled labor and unskilled labor. Further, assume that the wage skill premium, w, in the South is greater than the skill premium in the North: w w > ws N wh a) What would have been the effect on the wage skill premium in the North had the relative supply in the North been less elastic? Illustrate and explain. (Hint: Compare a set of graphs with a relatively elastic relative supply in the North, RSI, and compare to it to a less elastic (steeper) relative supply in the North, RSNZ.) b) If training and education take time, then would this imply for the elasticity of the relative supply of skilled-to-unskilled labor? (Hint: Think about access and how people may respond immediately or over a longer time horizon.) Problem 1: Illustrate the effects of a migration flow of unskilled workers from the South to the North on two graphs that depict the (downward-sloping) relative demand for skilled to unskilled labor, RDSL, and the relative supply of skilled to unskilled labor, RS SL, in the North and in the South. Assume that the North and the South produce one good only using skilled labor and unskilled labor. Further, assume that the wage skill premium, w, in the South is greater than the skill premium in the North: w w > ws N wh a) What would have been the effect on the wage skill premium in the North had the relative supply in the North been less elastic? Illustrate and explain. (Hint: Compare a set of graphs with a relatively elastic relative supply in the North, RSI, and compare to it to a less elastic (steeper) relative supply in the North, RSNZ.) b) If training and education take time, then would this imply for the elasticity of the relative supply of skilled-to-unskilled labor? (Hint: Think about access and how people may respond immediately or over a longer time horizon.)

Answer rating: 100% (QA)

a To illustrate the effect of a less elastic relative supply of skilled labor in the North on the wage skill premium we will create two graphs Graph 1 ... View the full answer