Question

Use short-run supply demand analysis to indicate how equilibrium price and quantity will change if the following changes occur in the economy. Draw a supply and demand curve for each answer and provide a brief one sentence explanation.

c) Immigration policy leads to a sharp reduction in the in-migration of Mexican workers. What happens to the market for low-wage labor in Los Angeles?

Answer 1

Immigration is the global movement of people from one nation to a destination country in order to settle as permanent residents . Immigratibon cause pressure on job issues of workers in destination nation. Immigrant workers would be ready to work low skilled workers. Thereby it affect the job of low -skilled workers of domestic economy. Immigration policy is the policy taken by a government in order to reduce the immigration of people from other nation to their economy. Immigration policy leads to a sharp decline in the in-migration of Mexican workers. In- migration is the process of people moving into a new area in their country to live there permanently. Suppose initially labor market in Los Angeles initially equilibrium at point F where labor demand curve Ld and labor supply curve Ls intersects at W level of wage and L levell of labor employment. When the government implemented immigration policy results sharp reduction in -migration of labors. It will increase the demand for labor in production process . Thereby it will increase the labor employment and labor wages. As a result labor demand curve shifts to right as Ld1 . Labor employment increases to L1 and wage level increases to W1 .