Question

What is the long-run effect of immigration on capital use in the receiving country?

Answer 1

Unlike the static analysis, here the change in immigration represents a change in long-run flows. The flow of immigrant workers dilutes the capital stock, hence any change in the flows has permanent (albeit small) effects on wages and the rate of return to capital.

Answer 2

Answer:

1. In the long run, immigration will lead to a rightward shift in the receiving country's production possibilities frontier. As a result, this shift will: Cause an increase in the production of the labor-intensive good and a decrease in the capital-intensive good.