Suppose the market wage for farmers is $10 per hour in country A and $20 per hour in country B,
there is the same number of people in both countries, there is the same amount of arable land, and
initially there is no way for farmers to move between A and B. Based on economic theory discussed
in class, what do you expect would happen to the wages of farmers in both countries if immigration
The effects of wages to farmers of the two countries would be a compound shift. To begin with;
a) The wages will have to be harmonized to avoid farmers who are live in country A to seek work opportunities in country B.
b) The other other bigger effect would be job threat. This would happen in country B has the farmers from country A would seek to do business in country B therefore stiffening the competition.
c) Wages in country B would be probably go down. This would be contributed by influx of other farmers from country B ready and comfortable working for just more than $10 a day. $15 or somewhere near $20 would be a nice deal for farmers from country A. This may force farmers from country B to work for less than $20 or otherwise risk losing out on their jobs.
Apr 27th, 2015
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