What will be the effect of the immigration on wages

Assignment Help Econometrics

Reference no: EM13237634

An economy consists of two regions, the North and the South. The short-run elasticity of labor demand in each region is -0.5. Labor supply is perfectly inelastic within both regions. The labor market is initially in an economywide equilibrium, with 600,000 people employed in the North and 400,000 in the South at a wage of $15 per hour. Suddenly, 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 between the North and the South occurs)?

b. Suppose 1,000 native-born persons per year migrate from the South to the North in response to every 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 each of the regions in the long run (after native workers respond by moving across regions to take advantage of whatever wage differentials may exist)? Assume labor demand does not change in either region.

Reference no: EM13237634

Questions Cloud

Optimize the human resource and production decisions : Workers are paid $50 per unit, per unit capital cost are $10, and your window sells for $5 each. Please optimize the human resource and production decisions. Do anticipate earning a profit or loss? Explain carefully.

Determine the tension in the threads : Two identical, small insulating balls are suspended by separate 0.35-m threads that are attached to a common point on the ceiling, Determine the tension in the threads

Area of the humanities : Choose realism or impressionism and discuss how it has manifested in any area of the humanities (i.e., painting, sculpture, literature, music, etc.), and give an example from any discipline in the humanities to illustrate how realism or impressionism..

Compute the concentration of cu2+ ion : Calculate the concentration of Cu2+ ion in this standard solution if the stock solution was 0.0200 M Cu2+.

What will be the effect of the immigration on wages : An economy consists of two regions, the North and the South. The short-run elasticity of labor demand in each region is -0.5. Labor supply is perfectly inelastic within both regions. The labor market is initially in an economywide equilibrium

Determine magnitude and direction of resulting acceleration : suppose a force F1=25 N and F2=75 N acts on a particle of mass 1.0 kg, Determine the magnitude and direction of the resulting acceleration

Camera was a revolutionary invention : In the 19th century, the camera was a revolutionary invention. Did the invention of the camera change the arts? Why or why not? Is there a relationship between movements such as realism and impressionism and the camera?

Explain a balanced chemical reaction for photosynthesis : Write a balanced chemical reaction for photosynthesis (accounting for both the light and dark reactions). Compare the pathways of photosynthesis and oxidative phosphorylation.

What happens to wages and employment if government imposes : What happens to wages and employment if the government imposes a payroll tax on a monopsonist Compare the response in the monopsonistic market to the response that would have been observed in a competitive labor market.

User Account

All Pages