Lecture 2

Question 1

Homogenous labour short run assumptions

Answer 1

capital is fixed, no migration costs

Question 2

Homogenous labour

Answer 2

immigrants and natives are
perfect substitutes

Question 3

Immigration effect on labour market in host country (short-run)

Answer 3

increases the supply of workers, decreases wages and lowers employment of natives

Question 4

Different types of labour. low & high skilled (short-run)

Answer 4

immigrants and natives may also be complements in production
(capital is fixed)

Question 5

Heterogenous labour

Answer 5

low- and high-skilled

Question 6

Heterogenous migration effect on labour market (short-run)

Answer 6

Immigration of immigrants leads to an increased demand for native workers
that are complements.

Question 7

Heterogenous labour effect on wages and employment of natives (short-run)

Answer 7

Wages and employment of native workers who are complements to
immigrants increase. But, the wage and employment level of low-skilled native workers, who
are substitutes to immigrant workers, go down.

Question 8

Long-run, capital assumption

Answer 8

Capital is not fixed

Question 9

What will happen when there are more people in an economy?

Answer 9

Increases the demand for goods and services.
Increased production requires labour, so labour demand must increase!

Question 10

Cobb-Douglas production function

Answer 10

Y = AL^βK^1−β

Question 11

spatial correlations

Answer 11

Referred to as area approach, this approach exploits that immigrants tend to cluster in a limited number of
geographical areas