Question

6. (15%) Business leaders often claim that there is a shortage of agricultural workers, and so they argue that immigrants must be brought in to do these jobs. For example, a 2018 Calgary Herald article, "Canadian farmers struggling with labour shortage seek changes to Temporary Foreign Worker program," points out that a special Canadian work visa, the TFW program, allows farmers to temporarily hire foreign workers if the farmers demonstrate that they cannot find a suitable Canadian worker. a) How do unregulated markets cure a labour shortage when there are no immigrants to boost labour supply? b) Why are businesses reluctant to allow unregulated markets to cure the shortage?

Answer 1

a)Unregulated market minimizes government intervention and maximises the role of the market.Unregulated markets clear labor shortage by pushing up wages.The law of supply applies to labor market and higher wages lead to an increase in the supply of labor.

b) Businesses are reluctant to allow unregulated markets to clear labor shortage because they do not want to increase the wages of the workers.They would like to increase the supply of labor by bringing in immigrants.