Allowing more immigration of unskilled workers will lower the real wages of skilled workers if

Question

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If unskilled workers are substitutes to skilled workers, allowing more immigration of unskilled workers will increase the supply of labor, and decrease the equilibrium wage rate of both unskilled and skilled workers. The reduction in the wage of skilled workers might be more substantial than the reduction of unskilled workers because they face less competition from unskilled workers. Therefore, the substitution effect dominates the scale effect, which leads to lower real wages of skilled workers.

Allowing More Immigration of Unskilled Workers Will Lower the Real