Initially we have a competitive labour market for plumbers in Canada. All of the workers are Canadian born, and have a similar level of skills.

1. With a new government, there is a significant increase of immigrants into Canada, including plumbers, with skills similar to those of Canadian plumbers. Explain what effect this will have on employment and the wage rate?

2. Now, suppose a union of Canadian plumbers is formed, and by law, only union members would be able to work as plumbers in Canada. List two requirements, which the union could insist on before new members could join the union. Further, if the efforts of the union are successful, explain how this will affect the market wage, and the level of employment.