21 November 2008, 7:32 am
Consider the possible effects of a "guest worker" program like the one proposed by President Bush in January 2004. According to research by the Pew Hispanic Center, "the undocumented population of the United States now numbers nearly 11 million people, including more than 6 million Mexicans" (Passel, Jeffery S. "Estimates of the Size and Characteristics of the Undocumented Population," March 21, 2005. http://pewhispanic.org.). Mexican workers pay large sums -- sometimes thousands of dollars -- to "coyotes" who smuggle them across the border. A guest worker program would allow a certain number of Mexicans to legally work in the United States for a set period of time. 5.6. Now suppose that there is one labor market for legal immigrants and U.S. citizens, and one "black market" for labor provided by illegal immigrants. In the labor market for legal immigrants and U.S. citizens, there is a minimum wage; assume that the minimum wage is currently the prevailing wage, and there is moderate unemployment. In the black market for illegal labor, there is no minimum wage. Under this new assumption, which of the following might be the result of a guest worker program that increased legal immigration and decreased illegal immigration? (You should assume that unemployed U.S. citizens do not enter the black market for illegal labor.) A. Consumer prices for farm goods such as avocados stay the same or increase B. Lower real estate prices in California C. Less unemployment for U.S. citizens, lower wages for illegal immigrants D. More unemployment for U.S. citizens, higher wages for illegal immigrants Thank you!... Read More »
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