Question: The Canadian government has decided to increase the skill of the Canadian labour force by increasing the number of economic (skilled worker) class immigrants admitted to Canada. Immigrants in targeted occupations will be given preference in the admissions process. Commercial airline pilots are members of one such targeted occupation.

a. This policy change will make it easier for commercial airline pilots to immigrate to Canada. Assume the labour market for commercial airline pilots in Canada is perfectly competitive (there are a large number of potential employers of airline pilots, and airline pilots are not covered by a union agreement). Who gains and who loses from this policy change, and why?

b. Now assume that all airline pilots in Canada are members of a union. The union contract specifies that airline pilots cannot be paid a wage less than W_u. The contract will not be renegotiated for another 2 years. How does this change you answer to part a?