Question

1. Assume that labor demand elasticity < 0 and labor supply elasticity > 0 but small. Explain in words and use a labor market diagram to show the effects of immigration on the receiving country’s
   1. GDP
   2. Number of native workers
   3. Labor income of native workers
   4. Number of immigrants
   5. Labor income of immigrants
   6. Total number of workers
   7. Wage rates before and after immigration
   8. Income of capitalists/consumers

Answer 1

a) GDP: in the short run because the labour demand curve is found to irresponsive with less than zero elasticity, the increasing labour in the areas won’t affect the demand for labour by the employer. But in the long once the immigrants are back in the area the demand will increase for goods and services and therefore the to increase the supply of goods and services the demand for labour will increase and may be the wages will increase in long run. These increasing demand and supply of labour will the shift the equilibrium upward. And the demand for labour elasticity will increase.

b) No. of native worker: the total supply of labour will increase as the more no. of worker will be added in the market due to immigrants. increase more number will accelerate their demand. Companies must have a series of these processes to produce goods or services, therefore, increasing some of these supplies may increase demand for other products. For example, for a construction company that manually provides many construction workers (such as installing gypsum boards and laying foundations), many construction supervisors, technicians, engineers, employees, and sales representatives (e.g. company growth) Requires, usually more interactive and complex activities. As these tools are essential for the production of final equipment (they are "complementary" to each other), if immigrant and indigenous workers specialize in different parts of the scope of the work specification, there is a strong demand for more indigenous migrants. Were able

c) Labour income of native worker: though, once the demand of the native workers will increase but there is no evidence of increasing wages of native workers. As the immigrants will start talking their better paying job if meet the requirements but id supply of labour increases the wage might not rise.

d) Labour income of immigrants: there might be chances of increasing wage as the demand for goods require to produce the goods and therefore the demand for labour increases and might increase the wage due to market demand conditions.

e) Total no. of workers: obviously with the immigrants the total no of workers increases in the area.

f) Wage rate after and before immigrants: wage rate might vary for native and immigrants but there are chances of marginal rise in the wages as the supply needed to increase to meet the increasing demands.

g) Income of capitalist and consumers when market demand and supply increase and push the equilibrium up the income and profit of the consumer increases. Income of the consumers depends upon the wages they get. If native loses the wage might end up at less wages.

Generally it is found from the evidence that the increasing immigrants hurt the wages and demands of the native workers and the native workers end up losing ting in the end