Question 1 ai) From 1900 to 1914, about 13.4 million migrants arrived in the US,

Question

Question 1

ai) From 1900 to 1914, about 13.4 million migrants arrived in the US, which was about 17.6 per cent of the U.S. population in 1900. It represented one of largest waves of immigration in world history. At that time, economists generally predicted that the wage rates in the U.S. would fall substantially, but in the end, the opposite occurred. Wages from 1900 to 1914 rose by 25 per cent. Explain with a diagram. (15 marks)

aii) Does your answer in (a)i necessarily imply that product prices increased during the 1900–1914 period? Explain. (10 marks)

b) Between 2000 and 2009, several industrial nations, including Germany, Japan, Austria, Spain, Italy, Sweden, and Greece experienced a contraction of their working populations. This trend is expected to continue in the coming decade. How will it affect the wages earned by the workers and the rents earned by the owners of land and capital in these countries? (12 marks)

Explanation / Answer

From 1900 to 1914, about 13.4 million migrants arrived in the US, which was about 17.6 per cent of the U.S. population in 1900. It represented one of largest waves of immigration in world history. At that time, economists generally predicted that the wage rates in the U.S. would fall substantially, but in the end, the opposite occurred. Wages from 1900 to 1914 rose by 25 per cent.

In order to explain this diversion, we would first understand the viewpoint of the economists who believed that the wage rates would decrease.

According to the concept of price determination, the prices of every commodity as well as factor of production decrease with an increase in its supply.

Therefore, according to this concept, the economists believed that as the supply of labour increased due to the huge influx of migrants, the wage rates would fall drastically.

However, the economists did not take into consideration the fact that as these migrants came to the US, they would demand goods and services for their survival. Due to the increased demand for goods and services, the Aggregate Demand in the economy increased manifold.

The following chain effects take place due to the above:

Thus, it is justified that the Wages increased rather than decreasing due to the influx of migrants in the US between 1900 & 1914.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

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