Explanation The immigration increases the population of the country and also increases the labor supply in the economy but at same time, the labor demand remains unchanged. In general, the marginal productivity goes down, as the quantity increases. Thus, increasing labor supply reduces the marginal productivity of labor. Labor wage is determined by their marginal productivity. Since the marginal productivity decreases, the equilibrium wage also reduces. Figure 1 shows the impact of shift in the supply on equilibrium...

Theeffect of immigration on demand and supply of labor.

Principles of Economics (MindTap Course List)

8th Edition

ISBN: 9781305585126

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 18.3, Problem 3QQ

To determine

To determine: Theeffect of immigration on demand and supply of labor.

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What factors can explain the relatively small effect of low-skilled immigration on the wages of low-skilled workers?

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