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How would you expect immigration by primarily low-skill workers to affect American low-skilledworkers?
So, it can be said that immigration is not the real reason behind the decline of wages of low-skilllabors.
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Chapter 15
Labor Markets and Income
Markets and Welfare
The Economics of Labor Markets
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Essentially, what we're talking about here is an increase in supply. So if we have, for example, the market for low skilled labor, the price is the wage of the quantity is just the number of workers. We're going to have a supply. Let's say it's a supply of strictly American workers, and then we have a demand. Now, if we introduce foreign workers, we now have a new supply curve. It's American workers, plus foreign workers increase in supply. What does that do? Well, it's going to give us a new equilibrium. So we see that the quantity has clearly gone up, the quantity demanded in the quantity supplied. And what has happened to the price? Well, the price, which again is the wage has gone down. So all else being equal and that's a very important condition. All else being equal, the wage will fall, and that's the wage of not just foreign workers but also the wage of American workers. In reality, we see a lot of other things going on at the same time in the low wage labor market, so that the supply does not typically get pushed so far out to the right because very often, American workers will choose to do other things in the place of falling wages in the low skilled labor market. Things like going and getting Maur education, or in some way improving their skills so that they're no longer actually part of the low skilled labor market.
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