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SVTPerformance's Chain of Restaurants
Road Side Pub
Any Economists here?
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<blockquote data-quote="SNCBOOM" data-source="post: 3579569" data-attributes="member: 183309"><p>I'm a senior undergrad economics major at the moment but will be entering the PhD program soon. And luckily I have a labor economics course at the moment. Basically, the domestic supply of labor is much higher on the demand curve than the total labor supply curve (which includes illegals). With that said, the domestic supply of labor is less willing to work for a lower wage. The equalibrium amount of domestic labor is working for a higher wage with less workers than illegals...nothing new or revolutionary really. The illegals drive the wage down and increase the number of workers working for that wage. If all illegals were deported or restricted from working, the wage would be driven back up (as would the prices for the consumer) and the number of workers would decrease back to the domestic level. Consumers of products and services benefit from reduced prices, employers benefit at least in the short run, but eventually more firms will enter the workforce and economic profits will be driven back to 0 (in the long run). The first instance I spoke of a situation in which the demand curve stayed constant, but if you vary the demand curve based on immigration (i.e. increased demand for mechanics, teachers, retail clerks etc.), basically aggregate demand increases so workers who are not close substitutes for unskilled immigrant labor may benefit because of the increased consumer demand. So basically the only losers from immigration at this level are domestic workers with less than a high school education which may be highly substitutable. Assuming that immigrants work when they arrive, profit-maximizing models of employer behavior suggest that they are paid no more than the value of their marginal product or the extra added value of their production. So if they rely only on their own earnings to finance their consumption, immigrants do not reduce the per capita disposable income of the native population. AND if the earnings of the immigrant are less than or not equal to the FULL value of output they add then the native population benefits.</p><p></p><p>Now on to the public subsidies...</p><p>If their [immigrant workers] taxes paid are enough to cover these benefits then the disposable income of the native population is not threatened. And if their taxes paid aren't enough to cover the costs that they utilize it could be large enough to reduce the aggregate income of natives...no big suprise there. But there are three considerations that suggest that illegal immigration may be more likely to increase the aggregate income of natives than legal immigrants. First, illegal immigrants come mainly to work so this adds to the production of domestic goods and services. Second, no matter how poor they are they are still ineligible for many programs (Social Security, unemployment insurance, food stamps), and unless they're paid in cash which happens a lot they still pay taxes (payroll and sales, and I would even suspect property taxes), and quoting my text here "one study indicated that 75% of illegal immigrants had income taxes withheld but that relatively few filed for a refund."</p></blockquote><p></p>
[QUOTE="SNCBOOM, post: 3579569, member: 183309"] I'm a senior undergrad economics major at the moment but will be entering the PhD program soon. And luckily I have a labor economics course at the moment. Basically, the domestic supply of labor is much higher on the demand curve than the total labor supply curve (which includes illegals). With that said, the domestic supply of labor is less willing to work for a lower wage. The equalibrium amount of domestic labor is working for a higher wage with less workers than illegals...nothing new or revolutionary really. The illegals drive the wage down and increase the number of workers working for that wage. If all illegals were deported or restricted from working, the wage would be driven back up (as would the prices for the consumer) and the number of workers would decrease back to the domestic level. Consumers of products and services benefit from reduced prices, employers benefit at least in the short run, but eventually more firms will enter the workforce and economic profits will be driven back to 0 (in the long run). The first instance I spoke of a situation in which the demand curve stayed constant, but if you vary the demand curve based on immigration (i.e. increased demand for mechanics, teachers, retail clerks etc.), basically aggregate demand increases so workers who are not close substitutes for unskilled immigrant labor may benefit because of the increased consumer demand. So basically the only losers from immigration at this level are domestic workers with less than a high school education which may be highly substitutable. Assuming that immigrants work when they arrive, profit-maximizing models of employer behavior suggest that they are paid no more than the value of their marginal product or the extra added value of their production. So if they rely only on their own earnings to finance their consumption, immigrants do not reduce the per capita disposable income of the native population. AND if the earnings of the immigrant are less than or not equal to the FULL value of output they add then the native population benefits. Now on to the public subsidies... If their [immigrant workers] taxes paid are enough to cover these benefits then the disposable income of the native population is not threatened. And if their taxes paid aren't enough to cover the costs that they utilize it could be large enough to reduce the aggregate income of natives...no big suprise there. But there are three considerations that suggest that illegal immigration may be more likely to increase the aggregate income of natives than legal immigrants. First, illegal immigrants come mainly to work so this adds to the production of domestic goods and services. Second, no matter how poor they are they are still ineligible for many programs (Social Security, unemployment insurance, food stamps), and unless they're paid in cash which happens a lot they still pay taxes (payroll and sales, and I would even suspect property taxes), and quoting my text here "one study indicated that 75% of illegal immigrants had income taxes withheld but that relatively few filed for a refund." [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Any Economists here?
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