The specific-factors model predicts that, after immigration, the equilibrium wage in both industries in the destination nation:
A) will rise.
B) will fall.
C) will remain the same.
D) cannot be determined with the information given.

Question

Quizplus · Accepted Answer

The specific-factors model suggests that an increase in labor supply (due to immigration) in the destination nation will lead to a decrease in the equilibrium wage in both industries, as the increased supply of labor reduces the marginal productivity of labor, thereby lowering wages.

The Specific-Factors Model Predicts That, After Immigration, the Equilibrium Wage