If the supply of unskilled domestic labor and the supply of unskilled immigrant labor are both perfectly inelastic, then the immigration surplus to the domestic economy can be estimated by:

Question

Quizplus · Accepted Answer

If both supplies are perfectly inelastic, then the arrival of immigrants does not affect the number of unskilled domestic workers available for hire. Therefore, the wage rate remains the same for the domestic unskilled labor, and the only change is in the wage rate for the immigrant unskilled labor. The immigration surplus, which is the increase in economic welfare of the domestic economy, can be estimated as one-half of the number of immigrants times the difference between the pre-immigration and post-immigration wage rates. Therefore, the correct option is D, as it represents this formula.

If the Supply of Unskilled Domestic Labor and the Supply