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The graphs below show the demand for labour in two countries, Avalon and Babylon, and several vertical labour supply curves. Use these diagrams to illustrate
The graphs below show the demand for labour in two countries, Avalon and Babylon, and several vertical labour supply curves. Use these diagrams to illustrate the effects of migration from one country to the other in search of a higher wage. Let the amount of migration (change in labour supply) be equal to the (identical) horizontal distance between the supply curves in both graphs. 4 a. Identify the equilibria that obtain in both countries, first before the migration takes place, and then after the migration takes place. In which country does the wage rise due to migration, and in which does it fall? b. Use consumer and producer surplus to measure the welfare effects on suppliers and demanders of labour in the two countries and use the labelled areas to record them below. Use plus and minus signs to indicate whether each group gains or losses (workers who migrate, workers who stay in A, workers who stay in B, employers in A, employers in B, country A excluding migrants, country B excluding migrants) c. In this model, does world welfare necessarily rise due to this migration
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