Suppose the market wage for farmers is $10 per hour in country A and $20 per hour in country B,

there is the same number of people in both countries, there is the same amount of arable land, and initially there is no way for farmers to move between A and B. Based on economic theory discussed
in class, what do you expect would happen to the wages of farmers in both countries if immigration
were allowed?

In economic theory, when immigration is allowed, the wages of farmers in both countries are expected to converge towards an equilibrium.

Initially, the market wage for farmers in country A is $10 per hour, while in country B it is $20 per hour. This wage difference is primarily driven by the difference in labor supply and demand conditions, where the supply of farmers in country A is relatively higher than the demand, leading to lower wages, while in country B, the demand for farmers exceeds the supply, resulting in higher wages.

When immigration is allowed, farmers from country A can now migrate to country B in search of higher wages. This increases the supply of farmers in country B, leading to a relatively larger labor force. As a result, the increased supply of farmers in country B puts downward pressure on wages, causing them to decrease.

On the other hand, with farmers migrating from country A to country B, the labor force in country A decreases. This reduced supply of farmers in country A leads to a decrease in labor supply, which in turn increases the wages of farmers in country A.

As the process of migration continues, the gap in wages between the two countries starts to narrow. Eventually, the wages of farmers in both countries will converge to an equilibrium level. The equilibrium wage will be determined by the interaction of labor supply and demand in both countries, taking into account factors such as productivity, skills, and the cost of living.

It is important to note that the convergence of wages due to immigration can also be influenced by factors such as differences in technology, capital availability, and institutional factors between the two countries. Additionally, the speed and extent of wage convergence may vary depending on various economic and policy conditions. Nonetheless, in general, allowing immigration tends to drive wages towards an equilibrium level across countries.