Consider a model of immigration with labor complementarity presented in Figure 12.2. Suppose that the demand for domestic labor in meatpacking is perfectly inelastic (because there are only so many machines, and each machine requires a fixed number of workers to work with it), and suppose that the arrival of immigrants from some country with well-developed woodworking traditions doubles the marginal product of domestic labor in the furniture industry for each level of employment. Assume that the opportunity cost to immigrant workers is very low, so that the cost of hiring them is a negligible portion of the production costs in the furniture industry.
In Figure 12.2

(a) Draw Figure 12.2 for this case, showing how the diagram and the equilibrium are affected by equilibrium.
(b) Do domestic employers benefit from immigration? Why or why not?

Transcribed Image Text:

Labor demand in I meatpacking Labor demand in furniture Lfurnie MIC