Suppose in immigrant sending countries, there is an available but not unlimited pool of potential immigrants at prime working ages, ages 25-64, who also have formed family relationships as is typical. Not all are partnered, but many are.

a.   [2 points] If there were no prohibitions on activities by women in country A, what would you expect to be true in equilibrium about the wages paid to immigrant workers in country A and country B, call them wA and wB ?

b.   [2 points] With the restrictions on women’s activities, what would you expect to be true in equilibrium about the wages paid to male immigrant workers in country A and country B, call them wmA and wmB ? Recall the upshots of Chapter 8 about compensating wage differentials.

P.10.2 [8 points] Suppose that the demand for rough laborers is

LD  = 100 – 10 W

where W = the wage in dollars per hour and L = the number of workers. Suppose labor is supplied inelastically, meaning that the labor supply curve is vertical at the number of workers.

Suppose immigration increases the supply of rough laborers from 50 to 60.

(a) [2 points] Sketch out labor demand and labor supply in this market, and label some

important numbers like the y-intercept.

(b) [2 points] What are the returns to the immigrants themselves?

(c) [2 points] What happens to the returns to native rough labor? Be specific.

(d) [2 points] What happens to the returns to other factors? Be specific. (Recall that other  factors earn the rest of GDP, and GDP is the total area under the labor demand curve.)

P.10.4 [10 points] The table below shows labor demand, native labor supply, and immigrant labor supply in a labor market. “Demand” is the number (in thousands) of employees that firms  would be interested in hiring at particular wages. “Domestic supply” is the number (in thousands) of native workers who are interested in working in the occupation at particular wages, and “ immigrant supply” is the number (in thousands) of immigrants who are interested in working at particular wages.

Immigrant labor supply is inelastic and constant, while native labor supply is not. Total labor supply is the sum of native labor supply and immigrant labor supply. The last column is left blank for the user to fill in.

(a) [2 points] Graph the labor market diagram, showing labor demand, native labor supply, and total labor supply.

(b) [2 points] What is the equilibrium wage rate before immigration? How many workers would be hired?

(c) [2 points] What is the equilibrium wage rate after immigration? How many workers would be hired? How many domestic workers would be hired? How many immigrant workers    would be hired?

(d) [4 points] Has immigration caused a change in the number of domestic workers hired? What was the change, if any? Why did the change, if any, occur?

RQ.12.9 [8 points] Since the end of the 19th century, women have lived longer than men on     average. Suppose an employer hired men and women, paid them the same wage for the same  job, and offered a defined benefit pension, which pays a constant amount each month after      retirement, until the worker’s death. Workers had to contribute to the pension fund in order to     receive it in retirement, and the employer required women either (1) to contribute a larger  amount per paycheck toward the pension, or (2) to take a smaller pension benefit once retired.  The employer otherwise would face paying out more of the pension fund to women than to men, on average, because women lived longer after retirement.

According to a decision by the Supreme Court, Los Angeles Dept. of Water and Power v. Manhart, 435 U. S. 702 , commonly  known as Manhart, the employer was guilty of gender        discrimination, prohibited under Title VII of the Civil Rights Act of 1964, because of the unequal monthly pension benefits after retirement. (Manhart was also cited in the landmark 2020 SCOTUS decision Bostock v. Clayton County, which held that Title VII prohibits discrimination  against employees who identify as gay or transgender.)

(a) [4 points] Discuss this. Perhaps take a look at the first page of the JSTOR article in the first link above. What do you think about these issues? (There are no wrong answers.)

(b) [4 points] Suppose there were a way for employers to provide defined contribution pensions, by setting up individual accounts for workers that took the form of mutual fund investments. Would employers find this arrangement more convenient in light of Manhart? Would workers? Would all workers? (There are correct answers here.)

P.13.2 [4 points] The Brain Surgeons’ Brotherhood faces an own-wage elasticity of demand for their labor that equals –0.1. The Dog Catchers’ International faces an own-wage elasticity of     demand for their labor that equals –3.0. Suppose that leaders in both unions push for a 20        percent wage increase but have no power to set employment levels directly. Why might             members of the Dog Catchers’ International be more wary of the targeted wage increase? Be   specific.

RQ.14.2 [4 points] Government officials find measuring the nation’s “economic health” useful. The unemployment rate is currently used as a major indicator of the relative strength of labor  supply and demand. Do you think the unemployment rate is a useful indicator of labor market tightness? Why?

RQ.14.3 [4 points] Recent empirical evidence suggests that unemployed workers’ reservation wages decline as their spells of unemployment lengthen. That is, the longer they have been    unemployed, the lower their reservation wages become. Explain why this might be true.

P.14.2 [4 points] Suppose that, initially, the Pennsylvania (PA) economy is in equilibrium with no unemployment. Labor supply and labor demand are given by

LS  = 1,000,000 + 200 W

LD  = 19,000,000 – 300 W

where W = the annual wages and L = the number of workers. Then, structural unemployment  arises because the demand for labor falls in PA, perhaps because of competition from             international trade in steel. But wages in PA are downward inflexible; wages do not fall to clear the market. No one moves out of state. Suppose labor demand falls to

LD  = 18,000,000 – 300 W

How many workers will be unemployed in Pennsylvania? What will be its unemployment rate?

RQ.15.4 [4 points] Proposals to tax health and other employee benefits, which are not now       subject to the income tax, have been made in recent years, often with the motivation of reducing national spending on health. Assuming that more highly paid workers (i.e., cash earnings) also   have higher employee benefits, discuss the likely effects on cash earnings inequality if these tax proposals are adopted.