The effect of this immigration on wages, Managerial Economics

An Economy consists of two regions, the North & the South. The short-run elasticity of labor demand in every region is -0.5. Labor supply is perfectly inelastic within both regions. The labor market is partially in an economy wide equilibrium, with 600,000 people employed in the North and 4000,000 in the South at a wage of $15 per hour. Rapidly, 20,000 people immigrate from abroad and initially settle in the South. They possess the same skills as the native residents and also supply their labor inelastically.

 a. What will be the effect of this immigration on wages in each of the regions in the short run (before any migration among the North & the South occurs)?

 b. Assume 1,000 native-born persons per year migrate from the South to the North in response to each dollar differential in the hourly wage between the two regions. What will be the ratio of wages in the two regions after the first-year native labor responds to the entry of the immigrants?

 c. What will be the effect of this immigration on wages and employment in every of the regions in the long run (after native workers responds by moving across regions to take benefit of whatever wage differentials may exist)? Assume labor demand does not change in either region.

 

Posted Date: 3/14/2013 7:23:51 AM | Location : United States







Related Discussions:- The effect of this immigration on wages, Assignment Help, Ask Question on The effect of this immigration on wages, Get Answer, Expert's Help, The effect of this immigration on wages Discussions

Write discussion on The effect of this immigration on wages
Your posts are moderated
Related Questions
The UN's Integrated Programme for Commodities Most of the political pressure for ICAs comes from spokesmen for the developing countries.  This is reflected in countless resolu

For all regular goods, income elasticity is positive though the degree of elasticity fluctuates as per the nature of commodities. Consumer goods are generally categorised under thr

Question 1: Martha National County Club is a golf club in an isolated wealthy community and accepts only females as members. There are 1,000 identical female members of the club an

Q. Time Factor for Determinants of Demand? Price-elasticity of demand depends moreover on the time that consumers take to adjust to a new price: longer the time taken, greater

The production function can have many uses. It can be used to compute least-cost factor combination for a given output or maximum output combination for a given cost. Knowledge of

How will you influence people to strive willingly for group objective in your organization (target based industry)? Apply your interpersonal influence through communication process

FACTORS RESPONSIBLE FOR WAGE DIFFERENTIALS WITHIN THE SAME OCCUPATION i.     Differences in the environment:   For example a doctor sent to North Eastern Province must be pai

In the long run, because of the assumption of free entry and exit of the firms, it's not possible for the firms to make super-normal profits nor it is possible for them to incur lo

The services of a certified psychologist cost $110 per hour, and an extended health plan covers 50 percent of that cost. Under the plan, the clients covered used 625 hours of this

Organization for Economic Development (OECD) An international organization found in Paris France in 1961, to act as a worldwide forum to stimulate world trade and