Response To An Economic Article
From this article, I have learnt a number of valuable lessons. The key lesson of this article is on how the demand and supply of labor works in the US, particularly the effect of new foreign workers on the wages of Americans. According to the law of demand and supply, an increase in the supply of workers results in a decrease in wages provided, everything remains constant. This law dictates what is expected to happen in any situation; nevertheless, this article brings in a new concept of new production facilities. Thus, the law of supply and demand is refuted because when a country invests in new production facilities, the model of increasing supply to meet demand that is fixed is not realistic. (Postrel)
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The other imperative lesson is on wage competition, where by the article has demonstrated that the jobs of American workers, and immigrants are not perfect substitutes of each other. This is because the skills of American workers are different from immigrants, regardless of having similar occupations and education.
My opinion on the article.
The author of this article has discussed the subject of supply and demand of labor exhaustively. This is based on his arguments on the matter; the author considers the effect of changes in the economic assumptions. The author has also done a comprehensive research from the numerous scholarly journals dealing with the issue of labor. The author also makes logical conclusions and recommendations based on the facts from the journals mentioned in this paper. The argument presented can be applied in any other area of economics. By changing the assumptions in an economic model, it is evident that the obvious expectation of how things should work is refuted. This article has shown illustrated the approach that any economist should use in criticizing any economic principle.
Postrel, Virginia. “Economic scene; yes, immigration may lift wages”. New York Times 3 Nov. 2005. 8 July, 2010. <http://query.nytimes.com/gst/fullpage.html?res=9506E6D8163EF930A35752C1A9639C8B63&sec=&spon=&pagewanted=2>