Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

Question

Quizplus · Accepted Answer

This is a well-established phenomenon known as the "immigration effect" or "factor price equalization." The influx of labor increases the supply of workers in the country of immigration, leading to downward pressure on wages. At the same time, the increased supply of labor in the country of emigration reduces the demand for workers, leading to higher wages. However, it should be noted that these effects are not necessarily permanent or uniform across all sectors or regions of the economy.

Labor Migration Tends to Increase Output and Decrease Wages in the Country