Suppose that it is known that the distribution of earnings for government
workers is relatively less disperse than that of the private sector. Use the
Roy model to explain type of workers (i.e., skilled or unskilled) that would
self-select into government versus private sector jobs. Construct a graph
of the relationship between earnings and skills to aid your discussion.
Suppose that worker skills can be measured in efficiency units, and that
efficiency units are distributed in the population such that worker 1 has
1 efficiency unit, worker 2 has 2 efficiency units, etc. There are 100 workers
in the population of Adanac. Adancians decide whether to migrate to the neighboring
country of S'estats Dentinu based on a comparison of their weekly earnings
at home (w0) and their potential earnings in S'estats Dentinu (wSD). The wage-skills
relationship is given by: w0=670+s and wSD=700+s, where 's' is the number
of efficiency units of the worker.
Assume no migration costs. What is the average number of efficiency
units and is the immigrant flow positively or negatively selected?
Suppose that it costs $50 to migrate from Adanac to S'estats Dentinu.
What is the average number of efficiency units among immigrants and is
the immigrant flow positively or negatively selected?
How would the selection process change if the migration costs are not
constant in the population but are much lower for more skilled workers?
Suppose negative labor supply and the flow of immigrants both increase as
the wage increases. True or false: the jobs immigrant workers hold are jobs
that would be held by native-born workers if the immigrants were repatriated.
How does the positively sloped labor supply and immigrant supply curves
in question 3 affect the immigration surplus? Use your graph in question
3 to aid your discussion.
