There are two countries, Home and Foreign. The two countries are identical except that Home has...

There are two countries, Home and Foreign. The two countries are identical except that Home has a labor force of 100 and Foreign has a labor force of 200. Given this allocation of labor across Home and Foreign, the value of the marginal product of labor in Home is 30 and the value of the marginal product of labor in Foreign is 20. If labor were to be free to move, the wage in both countries would be 25.

What is foreigns national gain/loss in allowing immigration?

Expert Solution

In the given case, number of workers are more in foreign country and less in home country. So this means that labour in foreign country has less employment opportunities compared to that of home country.

So due to immigration, labour will move from foreign country to home country in order to find more employment opportunities.

The result of this immigration will be loss in the total production of output in foreign country becuase of reduction in the number of labour.

Rahul Sunny answered 2 years ago

There are two countries, Home and Foreign. The two countries are identical except that Home has...

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There are two countries, Home and Foreign. The two countries are identical except that Home has...

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