Analyse how labour markets might be affected by a decrease in the supply of migrant workers.

      

Analyse how labour markets might be affected by a decrease in the supply of migrant workers.

  

Answers


marlyne
The market theory of wages suggests that a decrease in the supply of migrant workers will cause the supply of labour curve to shift to the left and will therefore lead to an increase in equilibrium wage rates. The exact impact on wage rates will depend upon the price elasticity of demand for labour. This increase in wage rates will lead to higher rates of economic rent for those workers who were willing to work at the previous wage rate. The reduction in migrant labour could lead to significant labour shortages in certain industries and UK firms becoming less competitive. This could have a negative impact on the demand for labour as UK firms outsource production to low wage economies.
marlinbito answered the question on July 6, 2018 at 09:52


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