Answer to Question #283303 in Macroeconomics for Comfort

Question

QUESTION ONE

Let’s assume there are no labour migration obstacles in Zambia and Malawi. A milling plant in Malawi

pays its workers K50.00/hour whereas in Zambia, it pays K10.00/hour. Graphically show how

international labour mobility would affect output, workers and land owners in both countries. [15 marks]

Answer 1

$Solution$

There will be reduced labor shortage .

It will provide temporary respite on domestic labor markets and aids in the reduction of unemployment, especially in economically disadvantaged areas.

There will be direct income effect through money remittances to home countries , in the case increased GDP.

In overall, labor migration contributes less than it should to the economic development of countries at both ends of the migration spectrum.