Without productivity growth, what is the long-run effect of labor migration?
A) There will be an increase in production in the sector using labor intensively.
B) There will be clear gains to owners of capital versus labor.
C) There will be clear gains to labor versus owners of capital.
D) There will be a shift of world resources toward the high-income nations.

Question

Quizplus · Accepted Answer

Without productivity growth, labor migration will only increase the supply of labor, leading to a decrease in wages in the receiving country. However, there will be an increase in production in the sector using labor intensively, as there will be more workers to employ. This may lead to an increase in output in the short run, but in the long run, productivity growth is necessary for sustained economic growth and higher wages.

Without Productivity Growth, What Is the Long-Run Effect of Labor