3. (18 points] Immigration facts (both past and current) indicate that there are

Question

3. (18 points] Immigration facts (both past and current) indicate that there are many individuals who move from one country to another. Trade models generally assume that goods are easy to move across borders but that labor moves only domestically (not internationally). So these models do not match all characteristics of the real world. Using the lens of the international trade models we have seen this semester, answer and explain your answer to the following questions a) If we were living in a Ricardian world (one factor, labor, homogeneous using a technology with constant marginal product of labor and so constant opportunity costs) would there be any economic incentive to establish limits on immigration (foreign workers mo ving in)? b) For many decades the U.S. imposed serious restrictions on imports of sugar from the rest of the world. In those same decades, workers migrated from the Philippines to Hawaii where they worked in agriculture, specifically in sugar cane fields. Why might those workers have chosen to leave the Philippines only to end up producing the same good elsewhere? Please explain. c) Before NAFTA there were large immigration flows from Mexico to the U.s. Since NAFTA those flows have continued but return migration (some of which was voluntary) has been much larger since NAFTA. There may be many reasons, but could the Heckscher- Ohlin-Samuelson model provide one? Explain.

Explanation / Answer

a No there will not be any economic reason except to protect industries of strategic importance

B The reason is due to tariff etc the wages in usa were very high compared to wages in Philippines

C The model could predict that wages in Mexico which is labour abundant country would rise and fall in USA. As a result there will be some people who will return back from USA to mexico

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