The Economics of Immigration 2nd Edition by Cynthia Bansak

Exercise 4

Now suppose South Korea had not increased border security (that is, back at the initial equilibrium). Instead, suppose South Korea enters a severe recession (which does not directly affect North Korea's economy). Draw separate labor market diagrams for North and South Korea (assuming perfectly inelastic labor supply in both countries), and analyze the effects of the recession on North Korean immigration. Illustrate the effects of a prolonged recession in South Korea on wages in North and South Korea and the equilibrium number of immigrants.