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Suppose that the shortaun labor demand curve is L D = 100 1011), where w is the wage rate. Moreover, both unskilled natives and unskilled
Suppose that the shortaun labor demand curve is L D = 100 1011), where w is the wage rate. Moreover, both unskilled natives and unskilled immigrants both supply their labor inelastically, i.e. the labor supply curve is L5 = Q, where Q is the labor force in the labor market. Assume that unskilled natives and unskilled immigrants are perfect substitutes for the rms. Initially, there is 10 natives and D immigrants. (a) What is the equilibrium wage rate initially? (b) Suppose the number of immigrants increases from zero to 10. What is the new short-run equilibrium wage rate
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