Labor Economics 5th Edition by George Borjas

Exercise 6

Labor demand for low-skilled workers in the United States is w = 24 - 0.1 E where E is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S. low-skilled workers who supply labor inelastically. If the U.S. opened its borders to immigration, 20 million low-skill immigrants would enter the U.S. and supply labor inelastically. What is the market-clearing wage if immigration is not allowed What is the market-clearing wage with open borders How much is the immigration surplus when the U.S. opens its borders How much surplus is transferred from domestic workers to domestic firms