Question

We continue our analysis of the impact of the deportation of the “Dreamers” from the U.S.

from In September 2017, U.S. president Donald Trump announced an end to the Deferred Action

for Childhood Arrivals (DACA), a U.S. program which allows undocumented immigrants to stay in the U.S. when they have entered the U.S. without documents as a child (so-called

“Dreamers”). It is still not clear whether Donald Trump will actually be allowed to deport the

“Dreamers”. Let us assume that Donald Trump eventually will be able to fulfill his campaign

promise and eventually will be allowed by the U.S. Supreme Court to deport the ca. 800,000

“Dreamers” from the U.S., effectively reducing the number of workers in the economy. However, we will now study the long-run effects of thepolicy

(a) What are the long-run effects of the deportation of the “Dreamers” on the real wage, the

real rental and production? Assume that agriculture is labor-intensive, and manufac-

turing is capital-intensive. Illustrate using a box diagram!

(b) How is your analysis related to the Rybczynski theorem and the factor price insensitivity theorem

Answer 1

Answer:In the last few years,the term "Dreamers" has been use to describe young undocumented immigrants who were brought to the United States as children,who have lived and gone to school here,and who in many cases identify as American.

Deportation of Dreamers

It was back in September 2017,that President Donald Trump and Attorney General Jeff Sessions announced the end of the Obama-era programme that shields hundereds of thousands of undocumented immigrants brought to the United States as children.

Long-Run effect on economy

Over a period of time,employers respond to the decreased labor productivity due to deportation of dreamers by decreasing investment in capital such as tools,machinery and supplies-which reduce the gains from specialization.

This Analysis related to the Rybczynski theorem and the factor price insensitivity theorem due to:

1) Rybczynski Theorem:The Rybczynski Theorem(RT) says that if the enodowmwnt of some resource increases,the industry that uses that resource most intensively will increase its output while the other industry will decrease its output.

Now when labor productivity decreases due to deporation of undocumented migrants(dreamers),Respective industries using them as resource will decrease its output due to lack of resources.

2)Factor Price Insensitivity Theorm:An increase in the amount of the factor found in an economy can be absorbed by changing the output of the industries,without any change in the factor prices.Due to deportation of dreamers factor of production namely labor and capital decrease.This will change the output of the industries in a negative way,without showing any change in the factor prices.