Question

4. Unskilled Labor Market Consider the market for unskilled labor of undocumented workers in the United States. Ignore skilled or legal workers for this problem. A. Putting the problem in a market framework A. Please suggest several ways in units (e.g. $/hr) you might measure the price of such labor. Pick one measure and label the units for the Y-axis. B. Please suggest several ways in units (e.g. hrs) you might measure the quantity of such labor? Pick one measure and label the units for the X-axis. C. Who are the consumers of unskilled labor? Give examples. D. Who are the producers of unskilled labor? Give examples. B. In the short-run (say a few months), how price elastic do you think the demand for unskilled labor of undocumented workers is? Explain why. C. Suppose that suddenly (during one month) draconian measures against undocumented workers were adopted. For example, these measures might include all of the following: extensive investigations at many work places, jail terms of months or years for any undocumented workers caught, and jail terms and extensive fines for anyone employing undocumented workers. a. Illustrate the impact in a supply and demand diagram, showing the market before and right after the draconian measures. Explain in words. Make sure to show what happens to prices and quantities. b. In the same diagram, show what happens to consumer surplus and producer surplus. Explain in words what happens to each of these and why. D. How price elastic do you think demand for unskilled labor of undocumented workers is in the long-run of say 10 years? Explain why. E. How would the results of 3Ca and 3Cb be different if the “after” period under consideration is a “long-run” of 10 years? Specifically, illustrate the impact of the draconian measures in a supply and demand diagram, including consumer and producer surplus changes. Show before the draconian changes and 10 years after they have been implemented but do not show any periods in between. F. Explain why the impact of the draconian measures on the changes in consumer and producer surplus are different in the long run and in the short run.

Answer 1