Suppose it is known that the distribution of earnings for government workers is relatively less disperse than that for workers in the private sector. Use the Roy model to explain which type of workers – 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 (wA) and their potential earnings in S'estats Dentinu (wSD). The wage-skills relationship is given by: w A =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 among immigrants (from Adanac to S'estats Dentinu), 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 to S'estats Dentinu, and is the immigrant flow positively or negatively selected?
How would the selection process change if the migration costs, rather than being constant throughout the population, were much lower for more skilled workers?
Suppose domestic labor supply and the flow of immigrants both increase as wages paid in the domestic country increase. True or false: the jobs immigrant workers hold are jobs that would be held by native-born workers if the immigrants were repatriated. Provide a graph to help answer the question.
Is the immigrant surplus due to the labor market always positive? Use your graph in question 3 to aid your discussion.
Consider two households. The first moved from Miami to Chicago in 2004. In 2006, the household returned to Miami . The second moved from Miami to Chicago in 2004. In 2006, the household moved from Chicago to Minneapolis .
What are the two types of migration in this example?
Explain what the different households probably learned by moving to Chicago .
