Question
War in Ukraine: The war in Ukraine has caused massive immigration of Ukrainians into Poland. Suppose in Poland there are two sectors: the urban sector
War in Ukraine: The war in Ukraine has caused massive immigration of Ukrainians into Poland. Suppose in Poland there are two sectors: the urban sector and the rural sector. The urban sector produces urban goods: services, office work, finance, and so on. The rural sector produces agricultural goods. Labor in Poland cannot move between sectors. Capital can move freely between the two sectors. Suppose all Ukrainians who immigrate to Poland work in the urban sector. Using all appropriate mathematics, graphs, and economic reasoning, describe the effects of Ukrainian immigration into Poland on the real wage of workers in both sectors, the real rental price paid to capital in both sectors, and the output of both sectors. Who is better off and who is worse off?
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