Now, consider a situation where some Foreign workers migrate to Home but not enough to reach the equilibrium with full migration (point B). a. Explain below in words what happens to wages in Home and Foreign. In the bucket diagram, clearly label the new World allocation of labour L', and the new wage values in Home and Foreign, w' and w, respectively. b. Use the bucket diagram above to discuss and identify the economic benefits and costs of immigrants to Home. c. Does Home gain from immigration overall? If so, clearly identify the area representing these gains in the bucket diagram above. If not, explain why not.
Now, consider a situation where some Foreign workers migrate to Home but not enough to reach the equilibrium with full migration (point B). a. Explain below in words what happens to wages in Home and Foreign. In the bucket diagram, clearly label the new World allocation of labour L', and the new wage values in Home and Foreign, w' and w, respectively. b. Use the bucket diagram above to discuss and identify the economic benefits and costs of immigrants to Home. c. Does Home gain from immigration overall? If so, clearly identify the area representing these gains in the bucket diagram above. If not, explain why not.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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answer a and c need to draw a graph
Transcribed Image Text:The bucket diagram below represents the World labor market. Suppose that initially the
distribution of the World amount of labour is given by L, and wages at Home and Foreign are
w and w*, respectively.
W
W
Wit
L→
L
B
Foreign wage
Home wage
World amount of labour
←L*
W
Transcribed Image Text:World amount of labour
Now, consider a situation where some Foreign workers migrate to Home but not enough to
reach the equilibrium with full migration (point B).
a. Explain below in words what happens to wages in Home and Foreign. In the bucket
diagram, clearly label the new World allocation of labour L', and the new wage
values in Home and Foreign, w' and w, respectively.
b. Use the bucket diagram above to discuss and identify the economic benefits and costs
of immigrants to Home.
c. Does Home gain from immigration overall? If so, clearly identify the area
representing these gains in the bucket diagram above. If not, explain why not.
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