Question
In Econland, the demand for low-skilled workers is represented by w = 38 - 0.1 E ( where E is employment in millions and w
In Econland, the demand for low-skilled workers is represented by w= 38 - 0.1E (whereE is employment in millions and w is wage.) Suppose that there are 114 million low-skilled workers in Econland, and that they supply labor perfectly inelastically (Hint: perfectly inelastic supply means that even if wage is $0.01, all workers with perfectly inelastic supply are willing to work.) Also suppose that if Econland opened its borders to immigration, 19 million low-skilled immigrant workers would enter Econland and supply their labor perfectly inelastically.
What is the change in low-skill worker wage in Econland when borders are opened to immigration? (Note: a positive number implies low-skilled wage went up after immigration is allowed, and a negative number implies low-skilled wage went down after immigration is allowed)
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