Question

In reference to migration policies

What are the theoretical effects of this policy on the labour market? Discuss using graphs and equations where appropriate.

(Please provide as detailed a response as possible, thanks)

Answer 1

Answer to question:-

With reference to migration policies, lets discuss its impact on labour market.

Firstly lets understand its impact on Aggregate Demand.

AD=C+I+G+(X-M)

Due to the migration polcy there would be High Net inward migration which would lead to increase in population. Since the population would increase it would lead to increase in other work, thus generating factor income. The rise in factor income would lead to increase in consumer spending. The drive in consumer spending will impact other components of aggregate demand.So, higher consumer spending would lead to increase in investment. The increased investment would impact the tax revenue. The increase in investment would lead to increase in taxes. This could lift exports. Thus migrant entrpreneurs can create jobds viz creating start ups etc