There is evidence that, other things equal, a 10 percent increase in the number of workers having a particular skill level leads to about a 4 percent decline in wages for workers with that skill level In addition, this 10-to-4 ratio appears to hold true whether the increase in labor supply is caused by domestic changes in labor supply or by an influx of foreign immigrants.
a. Suppose that 42,000 computer programmers work in Silicon Valley. If the number of computer programmers in Silicon Valley increases by 1260 because of a change in U.S. immigration laws, by how many percentage points would you expect the wage of computer programmers to fall in Silicon Valley?
b. Suppose that 8000 full-time cooks work in restaurants in the Denver area. If Denver becomes popular both with U.S. citizens and with foreigners such that 400 full-time cooks move to Denver from other parts of the United States while 80 full-time cooks move to Denver from other countries, by how much would you expect the wages of full-time cooks to fall in Denver?