MGEB06H3 Lecture Notes - Lecture 2: Real Wages

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MGEB06 – Chapter 3 Tutorial 1
The following questions are related to the article “Myths and Migration: Do Immigrants Really
Hurt American Workers’ Wages?”, The Economist, April 6th, 2006. (See pages 2 & 3)
Question 1
The article implied immigrants lower the real wage of low-skilled workers but have little or no
impact on the real wages of high-skilled workers in the U.S. Why? Support your answer using
two labour market diagrams: one for the low-skilled workers and one for the high-skilled
workers.
Question 2
What, if any, the impact does the influx of immigrants have on the rental market for capital?
Explain and support your answer using a diagram for the rental market for capital.
Question 3
Explain logic behind the sentence “Once capital has fully adjusted, the final impact on overall
wages should be a wash, as long as the immigrants have not changed the productivity of the
workforce as a whole.” Support your explanation with two diagrams: one for the rental market
for capital (like the one drawn in Question 2) and one for the labour market.
Hint: Fully adjusted refers to the very long-run.
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