What are the effects of migration on the real wages and output of a low-wage nation and a high-wage nation? What are the simplifications used to analyze these effects?

What will be an ideal response?

The migration of workers increases the real wages and reduces the output of a low-wage nation while it reduces the real wages and increases the output of a high-wage nation. The gain in output of the high-wage nation outweighs the loss in output of the low-wage nation, increasing economic efficiency and producing a net gain in world output. There are several simplifications used to arrive at these conclusions. First, the demand for labor is greater in the high-wage nation because its labor is more productive due to more capital, advanced technology, and better infrastructure. Second, we assume that neither nation experiences substantial long-term unemployment and that labor quality in the two countries is the same. Finally, we suppose that migration has no cost, occurs solely in response to wage differentials and is unimpeded by law in either country.