Labor demand for low skilled workers inthe U.S. is w=40-.15L where L is the numb
ID: 1248154 • Letter: L
Question
Labor demand for low skilled workers inthe U.S. is w=40-.15L where L is the number of workers (inmillions) and w is the hourly wage. There are 180 million domesticU.S. low-skilled workers who supply labor inelastically. If theU.S. opened its borders to immigration, 20 million low-skilledimmigrants would enter to supply labor. (Graph all parts)
a. What is the market-clearingwage if immigration is not allowed?
b. What is the market-clearing wagewith open borders?
c. Compare the loss of wages todomestic workers to the gain of wages for immigrants.
d. How much would opening bordersbenefit the entire U.S. by? Why is this figure greater than thegain to immigrants? Explain graphically.
e. The gain to the U.S. economymay not be ideal because of an issue of inequality that exists inthis situation. Explain this phenomenon.
Explanation / Answer
solution to the above question. A. labour demand low skilled worker in the u.s W= 40- where by W is denoted byhourly wages L = 15 where by Lis denoted by the numbber of workers 180 million domestic U.Slow-skilled who supply labour inelastically 40-w = 180,000,000 -w = 180,000,000divided by -40 w =$4,500,000. B. 40-w = 20,000,000 -w = 20,000,000divided by -40 w=$500,000. C. The less wages to domestic workers to thegain of workers for immigrants is $4,500,000 -$500,000 =$4,000,000. D. The open labour will benefit the entireU.S $500,000.it is greater than the gain to immigrant because thereare increase in domesticworkers. E. The gain to the U.S. economy maynot be ideal because there are less immigrant and as a resultof this the economy of U.S may beon recession and it may declined finally if they keep on allowinglesser immigrant.Related Questions
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