1. Labor market equilibrium occurs at a real wage at which the quantity demanded for labor equals the quantity of labor.

2. An increase in the amount of capital in the economy will shift the demand for labor curve to the (right/left), leading to higher real wages and employment.

3. Increased immigration is likely to lead to a shift in the labor-supply curve to the (right/left).

4. If wages and employment both rise, this is likely caused by an increase in the demand for labor. (True/False)

5. Historical Immigration Patterns and Real Wages. Between 1870 and 1910, 60 million Europeans left Europe to go to the United States, Canada, Australia, and Argentina. This immigration sharply increased the labor force in these countries, but decreased it in Europe.

a. Draw demand and supply graphs to show what happened to wages in Europe.

b. Draw demand and supply graphs to show what happened to wages in other countries.

6. Immigration and the Wage Gap between High- School Graduates and College Graduates. Some economists have argued that while immigration does not have a major effect on the overall level of wages, it does increase the wage gap between high-school graduates and college graduates. Can you explain this effect of immigration on the wage gap?

7. Philippines and Emigration. Suppose overseas Philippine workers returned to their home country. Using Figure illustrate the effects of this reverse flow of people on wages and employment.

8. Malthus and Subsistence Wages. Thomas Malthus wrote that if wages exceeded subsistence levels the population would increase, which, in turn would drive real wages back down to subsistence. Suppose there were an increase in the demand for labor, which raised real wages. Under Malthus s theory, show how the supply curve for labor would shift.
9. Malthus, Population Size, and Technology. Malthus believed the population would always adjust to bring real wages back to a fixed subsistence level. Using a demand and supply for labor diagram, show that an improvement in technology will lead to a higher level of population.

Transcribed Image Text:

Initial labor supply Labor supply Increased labor supply Increased labor demand Labor demand Initial labor ema Labor Labor (A) If the demand for labor increases (B) If the supply of labor real wages rise and the amount of labor employed increases increases, real wages all and the amount of labor employed increases.