The 1986 Immigration Reform and Control Act made it illegal for employers in the

Question

The 1986 Immigration Reform and Control Act made it illegal for employers in the U.S. to knowingly hire illegal aliens. The legislation has not reduced the flow of illegal aliens in to the country. As a result, it has been proposed that the penalties against employers who break the law be increased substantially. Suppose that illegal aliens, who tend to be less-skilled workers, are complements with native workers. Show on a graph and explain what will happen to the wages of native workers if the penalties for hiring illegal aliens increase.

Explanation / Answer

An increase in the penalty for hiring illegal aliens will force firms to cut down their hiring of such aliens. As a result, employment of illegal aliens will fall.  Being complementary goods, a fall in the employment of illegal aliens will also reduce the demand for native workers since both of them are employed in unison. As a result demand curve of the native aliens market will fall and shift parallel to the left. This will lead to a fall in wage rates along with employment of native workers.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.