How could legal immigration increase a nation’s stock of capital and what effects would such an increase have on productivity, production costs and product prices?
What will be an ideal response?
Human capital is the stock of knowledge, know-how, and skills that enables a person to be productive, and thus to earn income. The rise in business income in high-wage nations generated by the migration of workers from low-wage nations increases the rates of return on capital and may have long-run spillover effects for native-born citizens. The higher rates of returns on capital stimulate investment and have a long-run positive effect on a nation’s stock of capital. This in turn allows the labor force to become more productive, increases demand, reduces production costs and product prices, and provides higher wages and salaries for native-born citizens.
You might also like to view...
If a job pays a wage of $50 per hour, but has a non-wage cost valued at $20 per hour, the net benefit of taking the job equals:
A) $2.5 per hour. B) $20 per hour. C) $30 per hour. D) $70 per hour.
In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases
The increase in demand results in the quantity supplied A) increasing. B) staying the same. C) decreasing. D) increasing, staying the same, or decreasing depending on how much demand increases.