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W (K$) 14 13 Rich 12 11 10 9 8 7 6 5 Poor W (K$) 14 13 12 11 10 9 8 7

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W (K$) 14 13 Rich 12 11 10 9 8 7 6 5 Poor W (K$) 14 13 12 11 10 9 8 7 6 5 4 16 18 20 22 24 26 28 17 19 21 L 20 22 24 26 23 25 27 (M) 21 23 25 27 29 31 28 30 32 34 36 L 33 35 37 (M) 1. There are two neighboring countries, Rich and Poor. The diagram above represents the annual labor market for each. K stands for thousands and M for millions. All supply and demand curves are straight lines. Initially, migration between Rich and Poor is not allowed. a. What is the equilibrium annual wage and level of employment in Rich? In Poor? Now migration is allowed. Assume that migration is economically and psychologically costless to migrants. b. C. Draw the annual migrant labor market diagram for this case. Label the relevant prices and quantities. What is the net change in welfare for native workers in Rich relative to no migration? (Give a $ value.)

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