1. The effects of migration The following graph shows labor markets in the United States and Mexico. The horizontal axis denotes the total quantity of labor in each country, and the vertical axis depicts the wages paid to labor. For each country, the demand schedule for labor is represented by the value of the marginal product (VMP) of labor. Initially, the labor supply is 16 million workers, Sy, in the United States, and 24 million workers in Mexico, Sp. Suppose initially the United States and Mexico are in isolation, so that labor cannot move freely between them. ? SUSO SMex. 0 20 20 - 18 18 16 16 14 14 12 12 10 10 WAGE (Dollars per worker) WAGE (Dollars per worker) 8 CO 6 4 4 2 N D US. D 0 O Mex 0 4 8 12 16 20 24 28 32 36 40 0 4 8 12 16 20 24 28 32 36 40 QUANTITY OF LABOR (Millions of workers) QUANTITY OF LABOR (Millions of workers)Prior to migration, the wage rate in Mexico is W the wage in the United States. Suppose that Mexico and the United States loosen their immigration policies so that labor can move freely between the two countries. Indicate whether each statement about the effects of migration in the following table is true or false. Statement True False Because Mexican wage rates are relatively high, there is an incentive for Mexican workers to migrate to the United States. O O The effect of labor mobility is to equalize the wage rates in both countries. As a result of migration, the wage rate in Mexico falls. Labor migration helps U.S. workers. O|Cc|]O |0 O] |0 |0 Because migrant workers flow from uses of lower productivity to higher productivity, world output shrinks