Principles Policy AE on black markets and immigration

Alan Green, Stetson University,
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This exercise includes two policy application exercises: one on black markets and the other on immigration. Both require applications and/or extensions of supply and demand analysis. Also included is a readiness assessment test that covers background material for both exercises. The exercises can be used together or split.

Context for Use

This activity is designed for students at the principles level who have covered supply and demand in detail. It goes further into applications of supply and demand to black markets as well as immigration, issues which use the market analysis and also raise ethical questions. The black market question asks students to consider the economic, legal and ethical implications of attempting to aid people in Venezuela when the government does not want outside help. The immigration question offers students a range of policy options to address both the flow of immigrants into the United States and the status of immigrants who have already arrived. The policy AE discussion takes 30-45 minutes for a small class (around 20 students). A TBL TRAT quiz is usually taken before the policy discussion, which takes an additional 20-30 minutes.


This activity is a team-based policy debate. The broad learning goal is for students to apply economic models and analysis to support their arguments on relevant policy issues. The specific focus here is on extending the supply and demand framework in two ways. The first application is to black markets, where students are asked to consider how to aid people in Venezuela. It has no easy answers; economic efficiency suggests smuggling aid in through black markets, but with a repressive government such actions pose high risks for all involved. Students are thus asked to grapple with more than just economic efficiency; they must also consider legal and ethical implications. Their discussions will hopefully help them appreciate that markets are more than prices and efficiency. The second application exercise asks students to make immigration policy for the United States both for annual flows of legal and illegal immigrants and for immigrants without legal status who have been living in the country for some time. The basis for any answer should include a supply/demand labor market analysis. Like the previous question, however, students must also wrestle with legal and ethical questions. It may be economically efficient to grant legal status to all immigrants who are working productively, but what are the ethical implications of it?

Each application exercise has policy questions with five specific options. The topics are chosen and options are designed so that there is not an intended correct answer. Rather, students should be able to make an argument for any of the choices. Their task as a team is to discuss the issue and come to some consensus for the team choice. They are instructed to vote if they cannot come to consensus. The team discussion takes the first 15-20 minutes of the activity.
The instructor then facilitates a class discussion, which begins by having teams simultaneously reveal their choices (using large cards with letters). The teams are then called on in turn to defend their choices to the rest of the class. This begins a class wide discussion on what the best policy should be. The instructor facilitates this discussion for 10-15 minutes, after which it culminates in class vote. Students vote individually for the class vote, but extra credit can be offered for any team whose choice wins a majority of the class vote (thus incentivizing effective argument and persuasion).

Expected Student Learning Outcomes

In this activity students will apply market economic models to situations involving price controls and heavy government intervention in Venezuela as well as to labor markets to analyze and suggest policy surrounding immigration.

Information Given to Students

Student teams should consider the policy questions and come to a team decision as to which policy is best. They should prepare to defend their choice to the class with persuasive arguments that use economic models and reasoning. Teams should vote if individual members disagree as to the best choice.

Quiz - immigration and black markets (Microsoft Word 2007 (.docx) 19kB May14 18)
Student questions for Policy AE on black markets and immigration (Microsoft Word 2007 (.docx) 15kB Dec27 17)

Teaching Notes and Tips

This activity includes both a readiness-assessment quiz and application exercises. It can be completed in one class period or spread over two. The quiz is ten multiple choice questions on background material that has been previously covered in both readings and class lectures or activities. The quiz is posted online for individual completion before class and then given to each team to take again in class along with immediate feedback scratch cards.

In the application exercise students are given two policy questions in teams. These questions are multi-faceted and do not have easy answers. The goal is for students to engage in debates informed by economic models; the instructor should circulate, listen to arguments and ask probing questions to get students to think critically. The first question deals with black markets: if a government, particularly one viewed by many as illegitimate, imposes strict controls that limit economic activity, is it ethical to participate in black markets? Does the answer change if doing so can save people who are starving? Teams are asked to wrestle with these questions, keeping in mind the economic context but also considering the broader ramifications. The instructor should aim to keep them focused on the question and may want to play devil's advocate if a team settles on an answer very quickly. For the immigration questions, for instance, if teams go to one extreme (amnesty and open borders) or the other (closed borders and deportation) fairly quickly, the instructor should push them to consider the implications of their choices. Does amnesty send a bad signal? To what extent does it harm the economy to deport productive workers?

Once all teams have made their choices they should all report them simultaneously. This can be easily done by giving each team large letters (A through E) and having them all hold up the letter of their choice at the same time. The instructor should select one member from each team to briefly defend that team's choice to the class (random selection is good here; it is better if students do not know who is presenting until it is time to present so everyone has to prepare and be engaged in the discussion). In their presentation, students should refer to the models and concepts covered in class. For the Venezuela question they should discuss the role of black markets there and the difficult choices between efficiency and legality. For the immigration question, they should address the underlying labor market motivations for migration as well as its economic impacts.

The instructor then leads a class discussion on the topic, filling in or correcting flawed reasoning when necessary and also noting if there is a convergence to one or two options. With contentious issues such as these, it is important both to emphasize that intelligent people can disagree on them while also noting if there is a convergence to one option in the class. It is also good to briefly discuss why other options were eliminated; what was wrong with them? The discussion culminates in a class-wide individual vote on each policy. Students do not have to choose the same policy from their group for the individual vote; the point of the class-wide individual vote is to see if a particular argument "won the day" by securing a majority of votes. If that is the case, the instructor can note that occurrence and discuss whether the policy might be successful in practice. If there is no consensus policy, the instructor can note and/or discuss the challenge of succeeding in democratically passing sound policies. If desired, additional incentives can be offered to any team whose policy choice secures a majority of class votes; a few extra credit points can motivate teams to build consensus and argue strongly for their preferred policy.


Quiz grades provide evidence of preparedness and general understanding. Exams using application type questions assess the students' ability to meet the learning goal for this activity.

References and Resources