0
$\begingroup$

I have a question with the following statements.

Adding the gains to the Home economy from the Foreign workers, we end up with the triangle ABC, which represents the Home gains as a result of full immigration. The reason for these gains is the law of diminishing returns: as more Foreign immigrants enter the Home workforce, their marginal products fall, and because the wage equals the marginal product of the last worker, it must be less than the marginal products of the earlier immigrants. This economic logic guarantees gains to the Home country from migration.

I don't quite understand why the wage should equal to the the marginal product of the last worker. I mean, shouldn't the first immigrant get the same wage as what it is in the Home country, which is W in the figure? In other words, why does the first immigrant receive wage that is W'.

figure: enter image description here

Thanks in advance.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.