Question

Use a theoretical diagram to illustrate how labor inflows may affect the wage rate and the number of workers employed. Can we generalize the industry-specific model and studies to the aggregate economy?

Answer 1

See Here Below Graph Showing Without Impact Labour Inflow Impact

MacDonald’s Labour Graph 2019 (Tentative Data)

Definitely labour Inflow impact on labour rate and number of employed workers,

As above graph we take industry specific model example for evaluating labour inflow Rate is 55%, and labour rate is 30 %, and Labour, number of employed workers in company rate is 50%,

See Here Below Graph Showing Impact Of Labour Inflow On Wage Rate & Numbers of worked Employee.

MacDonald’s Labour Graph 2020 (Tentative Data)

Now we will Consider Labour inflow is increasing,

Then.

Labour inflow increased by 80%,

Then labour inflow is increased 25% compared to Past labour data of MacDonald’s 2019,

Implications of labour inflow in Company on Wage rate is,

Labours quantity increase, so company have to spend more money on all labours so it directly impact on wage rate because they can't spend more money on labours. they directly reduce wage rate from 30 % to 18.5%, and it impact on exiting Labour household income,

For Example -

In McDonald company, labour was 1000 in United States, and They pay per wages to them around $5000 each labour i.e. $5,000,000, so here, Labour inflow increased by 50% then MacDonald have to pay $75,000,000 but if production and demand is same then directly Reduce wages or wage rate of labour by $1667 and provide wages to 3337 so it impact on wage rate and also labour Household income, because of that it Impact aggregate Economy, which may be chance of reduction.

Another impact of Labour Inflow Number of Employee or labour quantity increased by 15% then Wage rate have to reduce by company for Cost cutting, So impact on currently working wage Rate reduction or chances of switch high paying present employee and take over Low pay new employee, and Number of Working employee rate Down by 25%. labour Inflow can be Reason of lost job of existing employee..

And it impact aggregate Economy cause of job loss, and household income stop.