If k = K/L falls between the values for k
A and k
B that simultaneously solve these
equations both before and after immigration then labour and capital can be split
between the two industries in such a way that factor returns will not alter as
immigration occurs. The lower economy-wide capital-labour ratio will be achieved by
reallocating production from the less to the more labour-intensive sector rather than
adjusting capital-labour ratios inside either sector. Factor returns will, therefore, be
unaffected (Leamer and Levinsohn, 1995). In such an economy, immigration
will again lead to expansion in output but there will be no redistribution from
labour to capital and tax receipts will grow simply by the taxes taken on immigrant
earnings.