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Consider a two-country model of immigration where one country has a near-zero labour demand curve. Suppose half of the combined labour force is in each
Consider a two-country model of immigration where one country has a near-zero labour demand curve. Suppose half of the combined labour force is in each country. Assume the other country has a higher value-of-marginal-product of labour schedule for every level of labour input. Label the following diagram showing the wages in each country (1 mark) Now interpret the two countries as a single economy with the country with the high value-ofmarginal-product of labour being the cohort of men in the workforce and the other 'country' being the cohort of women in "home production' (running a household) in the same economy. Comment on the labour movement and do a standard welfare analysis of the resultant move. (2 marks) Consider a two-country model of immigration where one country has a near-zero labour demand curve. Suppose half of the combined labour force is in each country. Assume the other country has a higher value-of-marginal-product of labour schedule for every level of labour input. Label the following diagram showing the wages in each country (1 mark) Now interpret the two countries as a single economy with the country with the high value-ofmarginal-product of labour being the cohort of men in the workforce and the other 'country' being the cohort of women in "home production' (running a household) in the same economy. Comment on the labour movement and do a standard welfare analysis of the resultant move. (2 marks)
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