Suppose the US welcomes a large number of unskilled migrants from India. 1. Use
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Suppose the US welcomes a large number of unskilled migrants from India. 1. Use the Solow model to discuss the effects of these unskilled migrants on the US capital stock per worker and income per worker in the short run 2. Use the Solow model to discuss the effects of these unskilled migrants on the US capital stock per worker and income per worker in the long run. Use the Romer model to explain the effects of these unskilled migrants on the US capital per worker and income per worker in the short run 3. 4. Next, suppose that 20 years later all children of these unskilled migrants become educated and high-skilled U.S. citizens. Illustrate a diagram to display the path of US income per worker in both the short run and the long run. Explain your reasoning.Explanation / Answer
The Solow Growth Model is a standard neoclassical model of economic growth. Developed by Robert Solow, it has three basic sources for GDP: labor (L), capital (K) and knowledge (A). "Knowledge" is a sort of catch-all category used to augment labor (AL), called "effective labor
1. As abundance of labour would be there, capital stock per worker would decrease and income per worker would also decrease
2. In both the cases it would be small as unskilled workers won't pros to be productive in anyways, hence would be replaced.
3.The Romer model produces the desired long-run economic growth that Solow did not. In the Solow model, capital has diminishing returns. TheRomer model does not have diminishing returns to ideas because they are nonrivalous.
As it intends to produce results in long term, immigrants won't be employed as they aren't skilled.
4. Both would be increased in both short and long run as skilled labours always produces better results.
Hence, neither enormously large number of labour would be required nor their incomes would be less.
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