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Ashley asked in Social ScienceEconomics · 1 decade ago

If the population of the United States suddenly grew because of a large immigration, what would happen to wage?

If the population of the United States suddenly grew because of a large immigration, what would happen to wages? What would happen to the rents earned by the owners of land and capital?

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  • 1 decade ago
    Favorite Answer

    The affect on wages would depend: more potential workers would be competing with each other; this would tend to drive down wages. But the larger population would mean more potential consumers, increasing demand for goods and services. This would increase the derived demand for labor, which would tend to drive up wages. In the short run, the potential for increased output is relatively rigid (a large sudden influx of immigrants may mean larger economies of scale and / or more firms entering into the various markets, these take time to develop). But wages also tend to be sticky on the downside, especially in the short run. The answer is inconclusive; I would say that in the short run, wages would not change much, and in both the short and long run the change could go either way, depending on the number of workers, and the number of consumers, this influx of immigrants produces.

    Rents would have to increase. Land and capital available for handling the increased population are going to be largely fixed. This would be a case of a large increase in demand, virtually no increase in supply, resulting in higher prices.

  • ?
    Lv 4
    5 years ago

    think back to 1990... ask this question then look out the window there is your answer. ------------------ the current influx of immigrants have mostly been unskilled labor - these people primarily end up competing for jobs in construction, farming/agriculture, landscape, restaurants, mining and other low skilled industries. As illegal immigrants they lack protections and often fear going to the police if and when they get robbed/cheated or scammed and they do not report their (cash based) income as income for tax withholdings - thus they compete on an uneven footing with legal residents that they are competing with. - (This isn't fair to them or to us). There is an oft told lie that these illegal immigrants are "doing the jobs American's won't do". This is a two part lie.. First they ARE mostly "Americans" - but the more insidious lie is that there were Legal US Citizens doing those same jobs before the massive influx of illegal immigrant labor.. the only substantive difference is that the illegal labor force works for less money. (and arguably has a better work ethic as well). This LIE has been repeated so often that many people think it's true. Another oft told lie is that this illegal labor market isn't using government benefits because they "aren't eligible". the fact is that our public health clinics are overrun with people of hispanic origin but they are forbidden by law from asking if the patient is in the country legally. The same is true for many other government services. Welfare and Unemployment and food stamps are also heavily hit. You may hear protests that these illegals are not eligible however - Who exactly is it that is now collecting Welfare and Food Stamps because the jobs that they USED to have are no longer available since they have been filled by illegal immigrants? If you look at the unemployment numbers today - WHO is hardest hit? The black community is very heavily hit with unemployment (last month the unemployment rate for "African Americans" was 13.6% - the overall unemployment rate was ~8.2%, This isn't "racism" - it is the logical result - directly resulting from the uncontrolled invasion of illegal immigrants.

  • 1 decade ago

    Unless the immigrants created companies, they would take jobs. That means that jobs would be more scarce. Also, if they do not speak English, then all of the jobs would go to bilinguals, which are children of immigrants. This is one reason that you see so many children of immigrants fighting for more immigration, legal or not. I am not sure if the employers would choose to pay less, or if there would simply be more jobless people. Owners of housing would profit, because there would be more demand for their housing, which means that they would raise the price. Jobless people would not be able to buy very much, so it would hurt the economy overall.

    The important thing that I must stress, is that immigrants are helpful, if they create businesses. If they do not, then they will compete with Americans for job positions at the businesses that already exist.

  • 1 decade ago

    Large immigration will shift the supply of labour to the right, leading to lower wages.

    From the producer'spoint of view, he will try to substitute labour for land and capital, switching the mix of factors used in production towards the cheaper factor (labour).

    However, as labour supply and employment increase, so does aggregate supply, and GDP increases.

    This factor will tend to increase the usage of all factors, not only labour.

    There will be two effects on rent, on one hand cheaper wages mean substitution away from land/capital into labour, but on the other, increased output will mean an increase in usage of all factors.

    I would say that wages will definitely fall, but the effect on rent harder to tell, but should increase as demand for land/capital overall increases (as capital/land has more labour to play with, the marginal productof capital/land goes up, more productivity more reward).

  • Wages would drop following increase in labour supply.

    Rents would increase following increase in demand for accomodation

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