Labor economics
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3. Fleeing political tyranny in country X, assume that 100,000 residents of X leave the nation en masse to a nearby city (City A) in a bordering country (call it country Y) that is democratic. Researchers in Y are interested in how the influx of new labor into Y has affected the local labor market of city A. They have collected the following information:
Unemployment rate of native country Y residents in:
City A
Before influx of X residents 6%
After influx of X residents 8%
Other cities in country Y (where no one moved to)
Before influx of X residents 7%
After influx of X residents 10%
(a) What was the change in the unemployment rate for native residents in City A after the influx of X residents?
(b) Can this be used to show that the influx of immigrants negatively affected the native population in city A? Why or why not?
(c) Explain how you would use the rest of the information above to better assess the impact of the influx of immigrants.
(d) Discuss any problems or dubious assumptions of your procedure in (c).
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