Assuming a country has a constant returns to scale Cobb-Douglas production function, what effect will immigration have on native labor that has a high degree of substitutability with the immigrant labor?
A) Immigration has no long-run effect on native wages.
B) Immigration lowers native wages in the long run.
C) Immigration raises the labor-capital ratio in the long run.
D) Immigration has no short-run effect on native wages.
E) Immigration has a negative effect on total employment in the short run.
Correct Answer:
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