I'm learning about the specific factor model and as part of that, I'm studying the impact of immigration on wages and labour.

I was doing an exercise online, with two goods cloth and food, cloth being more labour intensive than food, the question is about the impact of immigration on labour/wages and the answer states that:

  1. Immigration = more labour
  2. More labour means lower capital-labour ratio, lower land-labour ratio
  3. Lower capital-labour ratio/land-labour ratio lead to higher marginal productivity for capital and land

I dont understand 3., I was under the impression that generally less labour implies higher productivity, as every worker now has more land/capital to work with. Can anyone explain 3. ?

thank you for your help.

  • 2
    $\begingroup$ Reread statement 3. It is about the marginal productivity of capital and land not that of labor. $\endgroup$
    – user18214
    Jun 11, 2022 at 17:36


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.