The Labor Market The following graph shows the labor market in a country. The firms in this country are perfectly competitive in the output market. The labor market is also perfectly competitive. $2,400 $2,200 5 DLabor 2.000 5 $1,800 Labor $1,600 $1,400 Wage Rate Ul- H 'N O o 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 Number of Workers Question 1 2 pts Consider the information in the le named HW9 The Labor Market. Assume that the supply-of-labor numbers in that le pertain to native-born workers. In other words, currently, there are no immigrants in the country. Now suppose that the government opens its international borders and accepts 2,000 foreign-born workers into the country. Assume further that all of these immigrant workers nd jobs and become employed. Finally, assume that the immigrant workers are of the same skills as the native-born workers. Continue assuming that the number of foreign-born workers will be constant at 2,000 and they will be employed under all scenarios. This is not totally realistic but will make our calculations easy. Before the entry of the immigrant workers: Equilibrium wage rate = dollars. Number of natives employed = persons. Native labor income = dollars. Capital income = dollars. Question 2 2 pts Question 1 continued. After the entry of the immigrant workers: Equilibrium wage rate = dollars. Number of natives employed = persons. Native labor income = dollars. Number of immigrants employed = persons. Immigrants' labor income = dollars. Capital income = dollars. Note: By assumption immigrants are all workers and so they don't have capital income. Again, not totally realistic but makes our story simple. Also, keep in mind that, by assumption, all the immigrant workers are employed. Question 2 continued. This time assume that due to complementary aspects of tasks and some positive production externalities, the overall productivity of labor increases. For example, (as argued in the literature) some immigrants are unskilled. As a result, they take the jobs of the native unskilled workers. The natives, therefore, move to more managerial tasks, improving the overall productivity. Or foreign- born workers have greater technical knowledge and, as a result, not only they are more productive than the natives, but natives also learn some new knowledge from them. Alternatively, you may assume that immigrants bring in some capital, establish some business, and hire natives. For example, immigrants open restaurants and hire waiters. Or they open medical clinics and hire doctors and nurses. Finally, they start construction companies and hire framers, roofers, carpenters, electricians, and so on. Now ll in the following boxes assuming that, after the entry of immigrant workers, demand for labor increases by 6,000 workers (demand function shifts to the right by 6,000). Assume further that there is no change in the price of the product. Finally, continue assuming that all the 2,000 migrant workers will be employed. After the entry of the immigrant workers and after the increase in MPL (and hence demand for labor): Equilibrium wage rate = dollars. Number of natives employed = persons