In the two-country model of international labor mobility
A) the effect of migration is to cause real wages in the two countries to converge.
B) the effect of migration is to cause real wages in the two countries to diverge.
C) labor has only limited international mobility.
D) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries.
E) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries.

Question

Quizplus · Accepted Answer

In the two-country model of international labor mobility, the effect of migration is to cause real wages in the two countries to converge. This is because workers will move to the country with higher wages, which increases labor supply in that country, ultimately leading to a decrease in wages in that country. At the same time, labor demand increases in the country with lower wages, which leads to an increase in wages in that country. This process ultimately leads to a convergence in wages between the two countries.

In the Two-Country Model of International Labor Mobility