1. Suppose the diagram below depicts the labor market in Oldland before the departure of 1 million workers for another country. Oldland's Labor Market Before the Migration VMP 3 Millions of workers Assuming that international migration only has supply side effects, show how the departure of I million immigrants affects (a) the welfare of other factor owners in Oldland, (b) the welfare of the workers who remain in the country, and (c) total output. Calculate per capita output before immigration and compare it to the per capita income of the two groups remaining in the country after immigration. Explain your results. 2. Suppose that half of Romania's labor force of 10,000,000, or 5,000,000 people, moves permanently to Italy, which swells Italy's labor force from 15,000,000 to 20,000,000. Suppose also that as a result of this immigration, wages (converted to U.S. dollars at the going exchange rate for easy comparison) rise from $2 to $5 in Romania and fall from $7 to $6 in Italy.

1. Suppose the diagram below depicts the labor market in Oldland before the departure of 1 million workers for another country. Oldland's Labor Market Before the Migration VMP 3 Millions of workers Assuming that international migration only has supply side effects, show how the departure of I million immigrants affects (a) the welfare of other factor owners in Oldland, (b) the welfare of the workers who remain in the country, and (c) total output. Calculate per capita output before immigration and compare it to the per capita income of the two groups remaining in the country after immigration. Explain your results. 2. Suppose that half of Romania's labor force of 10,000,000, or 5,000,000 people, moves permanently to Italy, which swells Italy's labor force from 15,000,000 to 20,000,000. Suppose also that as a result of this immigration, wages (converted to U.S. dollars at the going exchange rate for easy comparison) rise from $2 to $5 in Romania and fall from $7 to $6 in Italy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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