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Suppose that after an influx of immigrants, labor supply in the market for low-skilled workers is...

Suppose that after an influx of immigrants, labor supply in the market for low-skilled workers is now given by ES = 30w − 180 (was ES = 30w-300). Labor demand is still ED = 300 − 10w. The government decided against imposing a minimum wage and the market wage is freely determined by labor supply and demand.

(a) Are the immigrants perfect substitutes or complements for native low-skill labor?

(b) Plot the original market equilibrium along with the new labor supply curve on the plot below, labeling it E1 S .

(c) What is the equilibrium wage rate and employment level in the market for low-skilled labor after the influx of immigrants?

(d) How many native workers are employed now?

(e) Calculate the new native firm and native worker surplus. Label these on your plot.

(f) What is the change in total surplus as a result of this immigration wave?

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