Answer to Question #148917 in Microeconomics for pedro sanchex

Question

In a recent article, Peri et al. (2020) examine the economic impact of the migration
from Puerto Rico to Orlando following Hurricane Maria in 2017, and find that employment in
Orlando increased, especially in the construction and retail sectors. They also find that the
earnings of construction workers decreased slightly, but earnings grew in the retail sector.
Are the results for construction sector wages and employment consistent with the specific factors model you learned in class? How about for the retail sector? If not, how can you reconcile
these results with the model? [Hint: Consider not only the labor supply effects, but also the
demand effects, of migration.]

Answer 1

The results for construction sector wages and employment are consistent with the specific factors model learned in class, because the wages decrease as a result of increase in supply of labor.

The retail sector shows the opposite result, because, as we can conclude, both the demand and supply of labor increased.