Question

Hello, can I get help with this queshtion. Heres the article. It's one queshtion asking for 2 parts.

The Economics of Immigration

Paul Krugman

In 1970, only 5% of U.S. workers had been born abroad. By 2016, however, 17% of American workers had immigrated to the United States, both legally and illegally. (1)

_{Figure 1: Percentage of U.S. labor force that is foreign-born}

_{Source: U.S. Bureau of Labor Statistics}

After years of simmering in the background, in 2016–2017 disputes about immigration policy surged to the top of the political agenda both in the United States and in several European countries. Much of the controversy involved social issues and questions of national identity. However, there was also a strong economic component: many of those calling for reduced immigration argued that immigrant workers take the jobs of native-born workers, drive down their wages, and/or impose fiscal burdens. Meanwhile, advocates of a relatively permissive immigration regime generally argued that immigration is highly beneficial to the economy. (2)

Serious economic analysis suggests that both sides were making unwarranted assertions, although not to the same extent. Claims that immigrants deprive the native-born of jobs are not supported by any existing theory or evidence, whereas the evidence on wage effects is ambiguous. On the other hand, although immigration certainly increases gross domestic product (GDP), its benefits for the native-born population are smaller and subtler than some seem to imagine. (3)

_{Figure 2: U.S. net migration}

_{Source: World Bank}

Let us start with the effects on employment. To believe—as even some top U.S. officials asserted in 2017—that jobs taken by immigrants come at the expense of native-born employment, you have to believe that the number of available jobs is a fixed number—the so-called lump of labor fallacy. It is called a fallacy because employment normally expands to match increases in labor supply. For example, the U.S. labor force grew rapidly in the 1960s and 1970s, as those born in the “baby boom” after World War II reached working age and women moved into the paid workforce. This surge in those seeking work did not cause a surge in unemployment; instead, it was matched by equally rapid growth in employment. (4)

The argument that immigrants drive down wages has more going for it but depends on the details. (5)

The simplest version of this argument points to an increase in the ratio of labor to capital, which could reduce the marginal productivity of labor. However, this is probably a fairly small effect, in part because economists believe that the elasticity of overall demand for labor with respect to wages is high—so that only a small wage reduction is needed to employ a larger work force—and because investment tends to rise with increased labor supply, which leads to a larger capital stock. (6)

Larger effects could come from the effects of immigration on particular groups of workers. Most immigrants to the United States over the past few decades have had relatively low levels of formal education. This suggests that they may compete with less-educated native-born workers, with a significant negative impact on the wages of this subgroup. (7)

Some economists do in fact make this argument. Others, however, point out that immigrant workers seem to do very different jobs from those taken by U.S.-born workers with similar education levels, and argue that this means that the immigrants have a quite different mix of skills and are not really competing with their U.S. counterparts. (8)

Overall, the case that immigration imposes large costs either on U.S. workers in general or on some specific groups of workers seems fairly weak. But what are the benefits of immigration? (9)

Adding productive workers certainly makes the U.S. economy bigger than it would otherwise be. But these extra workers are paid wages—and the marginal productivity theory of wages says that a worker is paid approximately the value that she or he adds to the economy—so the wages that immigrant workers are paid roughly equal the value of the production they add, meaning no net gain to the rest of the economy. (10)

That said, there are two routes by which immigration may raise incomes of the native-born:

• First, new immigrants surely compete with immigrants who are already here, pushing their wages down. Meanwhile, they raise the real wages of workers with different skill sets, such as the typical native-born worker. To make this concrete, consider agricultural labor: immigrants are more than three times as likely to be employed in that sector as native-born workers. If more immigrants come in, wages of farm workers will tend to fall, but this affects relatively few U.S.-born workers. Meanwhile, these lower wages probably get reflected in lower food prices for the native population. (11)

• Second, immigrant workers pay taxes, helping to support the provision of government services. It is true that they also receive government services, and therefore impose fiscal costs as well as benefits. However, immigrants are typically young workers, who do not cost the government much—remember, the really big government programs are Medicare and Social Security, which go to retirees. (Even Medicaid, which provides health care to many younger residents, spends much of its budget on nursing homes and other services for the elderly.) As a result, the fiscal impact of immigration is probably positive, even for less-educated, relatively low-wage workers who do not pay that much in taxes. It is clearly positive for more highly educated workers, like the immigrants who play such a large role in some high-technology industries. (12)

Overall, the economic impact of immigrants on those born in the United States is probably positive, although more so for the well-educated and high-wage workers. The best available estimates put this positive impact at around 0.3% of GDP, not huge but significant. (13)

Maybe the more important point, however, is that what we know about the economics of immigration does not support strong claims about the harm immigrants do. This does not mean that there is no case for immigration restrictions. However, that case cannot rest mainly on economic arguments. (14)

THIS IS THE QUESHTION:

Figure 1: Percentage of U.S. labor force that is foreign-born 100 (Employed: Foreign Born/Civilian Employment Level) FRED 18.0 17.5 pamyn 17.0 16.5 16.0 15.5 15.0 14.5 2010 2015 Source: ILS Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics Figure 2: U.S. net migration FRED Net migration for the United States 9M 8M 7M 6M 5M 4M 3M 2M 1M 1980 2000 2000 Source World Rank Source: World Bank People Suppose someone makes the following statement: "Immigrants take away jobs from American workers." Which of the following describes the slope of a labor demand curve that supports such an argument? negative (downward) slope positive (upward) slope perfectly horizontal perfectly vertical Which of the following describes the slope of a labor demand curve that is inconsistent with the article's description of labor demand? negative (downward) slope positive (upward) slope perfectly horizontal perfectly vertical

Answer 1

1) 'Immigrants take away jobs from American workers' implies that as the number of immigrants increases, the demand for American workers falls. This implies a downward (negative) sloping labour demand curve for American workers.

Correct answer : negative (downward) slope

2) A change in immigration in the country brings about a change in demand for American workers, is what has been summarised in the above study. It is clearly mentioned as to how a change in the number of immigrants is a major factor defining changes in the economy and in the demand and wages for American workers (positive or negative).

Thus, a labour demand curve that is inconsistent with the results above is a horizontal labour demand curve that implies that a change in the immigration level (more or less, causing a change in the number of workers in the country) does not alter the demand for American workers. This is not true according to the study given above.

Correct answer : perfectly horizontal