Many natives don't prefer foreigners taking their jobs, is it actually a bad thing for the countries economy?

  • $\begingroup$ How would you measure "bad for the country"? Is this a statement about individuals in that country, collective output, or something else? $\endgroup$ – BKay Apr 11 '18 at 21:06

enter image description hereIt varies. Importing a pool of labor, if we are to consider labor costs can have an impact if the migrants are willing to take lower wages. We know that R(revenue) = (MPK + MPL) * Price, which simply means the marginal product of capital + the marginal product of labor times price equals a firms revenue. Let’s assume that the additional labor will take lower wages. That can reduce a firms labor cost which is L * W (Labor quantity * wages). As labor costs decrease a firms profit can increase if revenue remains the same. This increase in Revenue leads to higher savings, which leads to budget surpluses. Capitals share of Income will grow. So we know that firms and the owners of capital (typically shareholders) benefit. The consumers are either unharmed, or get lower prices if the firm can reduce prices due to the lower Labor costs.

So you may ask “who’s hurt?”. Well in the short-run the people who lost their jobs to the migrants who were likely to take lower wages for low skilled labor (based on ethnic wage rates) were hurt. Essentially, you’d expect owners of capital to prefer migrants, and for workers (labor) in the impacted sector where the migrants flow to hate it.

So to answer your question (is it actually bad for the countries economy), no. Not in it of itself. GDP would be expected to grow in real terms (output), or not be impacted much at all. You could end up with increased profits and savings as well, which can lead to a savings surplus. Now whether or not there are certain individuals who are negatively impacted is another question.

  • $\begingroup$ (-1) "marginal product of capital + the marginal product of labor times price equals a firms revenue" This does not seem to be true at all, at least not in most models I am familiar with. $\endgroup$ – denesp Apr 11 '18 at 20:05
  • $\begingroup$ Yeah, I just back checked in a textbook. Y (Revenue) = F(K, L). The change in revenue from an additional unit of labor is the marginal product of that labor, and then the marginal product of capital (which in this case would remain fixed). The profit is revenue - the cost of the additional labor (L * W) - the cost of capital (K * R). I would reference macroeconomics by mankiw 2013. $\endgroup$ – Simeon Ikudabo Apr 11 '18 at 20:48
  • $\begingroup$ So according to the textbooks I’ve used over the years, this is correct. Depending on your source, you may get a different result, which is okay. You can post your result as well. $\endgroup$ – Simeon Ikudabo Apr 11 '18 at 20:50
  • $\begingroup$ Do you see that sometimes you write 'marginal revenue' and sometimes 'revenue' but these are not the same thing? Also you seem to add two marginal products which is not very meaningful in a general setting. $\endgroup$ – denesp Apr 12 '18 at 4:57

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