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The labor supply and demand equations in Mexico and the US are Ndr'llEx = 1402 VLF"Ex anstm": 80 NdUS = 600 4 Wm and N95 = 260 (Notice: To...

I need help with setting up and answering problem c.


Problem Set  3 c.jpg


c. If an unlimited flow of Mexican workers is allowed (free movement of labor across borders), at the end, wages will be equal in both countries (basically, in practice, there will be just one unified labor market). What would be this wage? How many Mexican workers will emigrate to the US? How many Mexican workers will be demanded in the US? At the end, how many workers will there be in México and the US? (Hint: Find the total labor supply and demand equations).

Problem Set  3 c.jpg

3. The labor supply and demand equations in Mexico and the US are Ndr'llEx = 140—2 VLF“Ex anstm“: 80 NdUS = 600 — 4 Wm and N95 = 260 (Notice: To make the exercise simple, we are assuming that the labor supply curves are
perfectly vertical at 80 in Mexico and at 260 in the US). where Nam“ and NdUS are the number of workers demanded in Mexico and the US (in
Infllions of workers). Wm“ and WUS ate the yearly wage rates in Mexico and the US (in

Top Answer

Given: Nd Mex = 140 - 2 W MEX  and Ns Mex  = 80 Therefore, W MEX = (140 - Nd Mex ) / 2 Nd US = 600 - 4 W US  and Ns US =... View the full answer

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