Question

How does the wage impact of immigration in the destiny country differ when labor supply is perfectly inelastic (vertical) from when it is not perfectly inelastic ? What explains the difference?

Answer 1

The wages of workers are the prime pull factors of migration. The labors are attracted by the higher wages in the foreign countries. The migration happens in the destination where more wages are available. But when labour supply is perfectly inelastic, the condition differs.Perfectly inelastic labor supply indicates that whatever changes occurs in wages, the supply of labor remains constant. In certain circumstances, the international labor supply assumes perfectly inelastic labor supply. It may due to several reasons like political crises, violence, natural disaster, strict rules and regulations etc.The perfectly elastic labor supply (horizontal supply curve) indicates the higher and infinite variation in labor supply as wage changes.The perfectly inelastic nature of labor supply is guided by time. It took larger time for labor to respond to changes and variations in relative wages.