In an economy with two industries, an increase in
Immigration will:
A)cause employment to increase in both in the long run.
B)cause employment to increase in one and decrease in the other in the short run.
C)cause employment to increase in one and decrease in the other in the long run.
D)cause a decline in wages in both industries in the long run.

Question

Quizplus · Accepted Answer

An increase in immigration will increase the labor supply, which will decrease wages in both industries in the short run. In the long run, however, one industry will expand and require more labor, while the other industry will contract and require less labor. The industry that expands will experience an increase in employment, while the other industry will experience a decrease in employment. Therefore, employment will increase in one industry and decrease in the other in the long run.

In an Economy with Two Industries, an Increase in