CHAPTER 9
9-1. Suppo a worker with an annual discount rate of 10 percent currently resides in Pennsylvania and is deciding whether to remain there or to move to Illinois. There are three work periods left in the life cycle. If the worker remains in Pennsylvania, he will earn $20,000 per year in each of the three periods. If the worker moves to Illinois, he will earn $22,000 in each of the three periods. What is the highest cost of migration that a worker is willing to incur and still make the move?
The worker must compare the prent value of staying in Pennsylvania to the prent value of moving to Illinois. A worker will move if the prent value of earnings in Illinois minus the costs of moving there exceed the prent value of earnings in Pennsylvania:
one of us74.710,54$)1.1(000,201.1000,20000,202=++=PA PV and
82.181,60$)1.1(000,221.1000,22000,222=++
=IL PV
The worker will move, therefore, if
PV IL – C > PV PA ,
where C denotes migration costs. Thus, the worker moves if
C < 60,181.82 - 54,710.74 = $5,471.08
9-2. Nick and Jane are married. They currently reside in Minnesota. Nick’s prent value of
lifetime earnings in his current employment is $300,000, and Jane’s prent value is $200,000. They are contemplating moving to Texas, where each of them would earn a lifetime income of $260,000. The couple’s cost of moving is $10,000. In addition, Nick very much prefers the climate in Texas to that in Minnesota, and he figures that the change in climate is worth an additional $2,000 to him. Jane, on the other hand, prefers Minnesota’s frigid winters, so she figures she would be $2,000 wor off becau of Texas’s blistering summers. Should they move to Texas?
Yes. The “climatic” aspects of the move exactly balance each other, so we should not take them into account. On the monetary side, the sum of Nick’s and Jane’s lifetime prent value of earnings in
Minnesota is $500,000. The corresponding amount in Texas will be $520,000. The difference between the two ($20,000) exceeds the cost of moving ($10,000), so the move will make the couple jointly better off.
9-3. Mickey and Minnie live in Orlando. Mickey’s net prent value of lifetime earnings in Orlando is $125,000. Minnie’s net prent value of lifetime earnings in Orlando is $500,000. The cost of moving to Atlanta is $25,000 per person. In Atlanta, Mickey’s net prent value of lifetime earnings would be $155,000, and Minnie’s net prent value of lifetime earnings would be $510,000. If Mickey and Minnie choo where to live bad on their joint well-being, will they move to Atlanta? Is Mickey a tied-mover or a tied-stayer or neither? Is Minnie a tied-mover or a tied-stayer or neither?
As a couple, the net prent value of lifetime earnings of staying in Orlando is $500,000 + $125,000 = $625,000 and of moving to Atlanta is $510,000 + $155,000 – $50,000 = $615,000. Thus, as a couple, they would choo to stay in Orlando. Thus, there can only be a tied-stayer. (There cannot be a tied-mover, becau the couple is not moving.)
For Mickey, staying in Orlando is associated with a net prent value of $125,000, while moving to Atlanta would yield a net prent value of $155,000 – $25,000 = $130,000. So Mickey would choo to move to Atlanta. Therefore, Mickey is a tied-stayer.
code breakFor Minnie, staying in Orlando is associated with a net prent value of $500,000, while moving to Atlanta would yield a net prent value of $510,000 –$25,000 = $485,000. So Minnie would choo to remain in Orlando. Thus, Minnie is not a tied-stayer.
9-4. Suppo a worker’s skill is captured by his efficiency units of labor. The distribution of efficiency units in the population is such that worker 1 has 1 efficiency unit, worker 2 has 2 efficiency units, and so on. There are 100 workers in the population. In deciding whether to migrate to the United States, the workers compare their weekly earnings at home (w0) with their potential earnings in the United States (w1). The wage-skills relationship in each of the two countries is given by:
w0 = 700 + 0.5s,
and
w1 = 670 + s,
where s is the number of efficiency units the worker posss.
coincidence
(a) Assume there are no migration costs. What is the average number of efficiency units among immigrants? Is the immigrant flow positively or negatively lected?
The earnings-skills relationship in each country is illustrated in the figure below. The US line is steeper becau the payoff to a unit of skills is higher in the United States. All workers who have at least 60 efficiency units will migrate to the United States. Therefore, there is positive lection and th
e average number of efficiency units in the immigrant flow is approximately 80 (the exact answer depends on whether the person with 60 efficiency units, who is indifferent between moving or not, moves to the United States).
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(b) Suppo it costs $10 to migrate to the United States. What is the average number of efficiency units among immigrants? Is the immigrant flow positively or negatively lected?
英文对话
If everyone incurs a cost of $10 to migrate to the United States, the U.S. wage-skill line drops by $10, and only tho persons with more than 80 efficiency units will find it worthwhile to migrate. The i
mmigrant flow is still positively lected and has, on average, 90 efficiency units.
comfrey(c) What would happen to the lection that takes place if migration costs are not constant in the population, but are much higher for more skilled workers?
If migration costs are much higher for skilled workers, it is possible that no skilled workers will find it worthwhile to migrate. We already know that even in the abnce of migration costs no worker with fewer than 60 efficiency units finds it worthwhile to migrate. If highly skilled workers find it very costly to migrate it might be the ca that there is no migration to the United States.
Income
700
66080
9-5. Suppo the United States enacts legislation granting all workers, including newly arrived immigrants, a minimum income floor of y
− dollars.
(a) Generalize the Roy model to show how this type of welfare program influences incentive to
migrate to the United States. Ignore any issues regarding how the welfare program is to be funded.
(b) Does this welfare program change the lection of the immigrant flow? In particular, are immigrants more likely to be negatively lected than in the abnce of a welfare program?
intensity(c) Which types of workers, the highly skilled or the less skilled, are most likely to be attracted by the welfare program?
U.S. Labor Market U.S. Labor Market
推荐信格式
The introduction of a wage floor in the United States (at y −
the great wall) shifts the U.S. earnings-skill relationship to the bold line drawn in the figures. If the returns to skills are higher in the United States (left panel above), there are then two ts of workers who find it profitable to move: tho who have very high skill levels (above s P ) as well as tho workers who have very low skill levels (below s L ). In contrast, if the returns to skills are lower in the United States than in the country of origin (the right panel above), the introduction of the welfare program does not change the incentives to migrate for any worker (although the incentives of some workers would change if the wage floor was high enough). The welfare program, therefore, acts as a welfare magnet for workers originating in countries that generate “brain drains”, but not in countries where unskilled workers have incentives to migrate even in the abnce of wage floors.
α αL P Dollars αN y −α
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9-6. The immigration surplus, though emingly small in the United States, redistributes wealth from workers to firms. Prent a back-of-the-envelope calculation of the loss accruing to native workers and of the gains accruing to firms. Do the calculations help explain why some gments of society are emotional in their support of changes in immigration policy that would either increa or decrea the immigrant flow?
The total loss in earnings experienced by workers in the United States is given by the rectangle w 0 B F w 1 in Figure 9-11. The area of this rectangle is given by:
Loss to Native Workers = (w 1 - w 0) × N .
We can calculate the loss to native workers as a fraction of GDP by dividing both sides by Q (national income). If we do this and rearrange terms we obtain:
M
N N Q M N w w w w Q +×+×−=)( Workers Native to Loss 0001.
Thus, the native loss (as a fraction of GDP) equals the percentage change in the native wage caud by immigration times labor’s share of national income times the fraction of the labor force that is native born. If we continue the numerical example in the text, this calculation yields: (-.03) × (.7) × (.9) = -1.89
percent of GDP. As national income is on the order of $11 trillion, the loss suffered by native workers is on the order of $208 billion. Capitalists receive this income plus the immigration surplus of $11 billion (e the text), for a total gain of about $219 billion (about 2 percent of GDP).
Even though the net benefits from immigration are small, particular groups in the United States either gain or lo substantially from immigration. This explains why the debate over immigration policy is often polarized.
9-7. In the abnce of any legal barriers on immigration from Neolandia to the United States, the economic conditions in the two countries generate an immigrant flow that is negatively lected. In respon, the United States enacts an immigration policy that restricts entry to Neolandians who are in the top 10 percent of Neolandia’s skill distribution. What type of Neolandian would now migrate to the United States?
No one would migrate from Neolandia. The policy does not change the cost-benefit analysis for the most skilled Neolandians. They did not want to migrate when they could enter the country freely, and they still will not want to migrate when they are the only ones who can obtain visas. The lesson is that changes in immigration policy affect the skill composition of the immigrant flow only if changes target immigrants who wished to migrate to the United States in the first place.
