A family - husband, wife, and two young children- reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?
A family - husband, wife, and two young children- reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
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Transcribed Image Text:(11) A family - husband, wife, and two young children - reside in southern Italy: the husband cur-
rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering
moving to northern Italy, where the husband could find a new job paying him 35,000 euros
per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family
likes the South much better: living there has a monetary utility in present value terms of
35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare
costs equal to 10,000 euros per year.
(a) If the family is supposed to live in northern Italy for the current and the next 3 years
and has a discount rate of 12 percent, is it convenient for the family to (immediately)
migrate to the north?
(b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per
year?
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