Consider the following model of immigration to the United States. Potential migrants originate in country 0, the source country. For each individual, lifetime income if they remain in the source country (denoted by YO) is given by the equation YO = MO + RO(S) where S measures the skill level of each person, with positive values of S indicating above-average skills, negative values of S indicating below-average skills, and S equal to zero for the average person. Lifetime income if a person immigrates to the United States (denoted by Y1) also varies with skills, as described by the equation Y1 = M1 + R1(S) %3D The parameters MO, M1, RO, and R1 characterize the lifetime income distributions in the two countries. Let C represent the total costs incurred when immigrating to the United States, including any psychic costs associated with leaving one's home country. Assume the following: мо»М1-С>0 and RO>R1>0 Assume that individuals seek to maximize their lifetime income.
Consider the following model of immigration to the United States. Potential migrants originate in country 0, the source country. For each individual, lifetime income if they remain in the source country (denoted by YO) is given by the equation YO = MO + RO(S) where S measures the skill level of each person, with positive values of S indicating above-average skills, negative values of S indicating below-average skills, and S equal to zero for the average person. Lifetime income if a person immigrates to the United States (denoted by Y1) also varies with skills, as described by the equation Y1 = M1 + R1(S) %3D The parameters MO, M1, RO, and R1 characterize the lifetime income distributions in the two countries. Let C represent the total costs incurred when immigrating to the United States, including any psychic costs associated with leaving one's home country. Assume the following: мо»М1-С>0 and RO>R1>0 Assume that individuals seek to maximize their lifetime income.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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QUESTION: Under these circumstances, which of the following equations describes the skills of individuals who would choose to migrate to the United States?
ANSWER CHOICES:
S<(M0-M1)/(R1-R0)
S>(M0-M1)/(R1-R0)
S<(M0-M1+C)/(R1-R0)
S>(M0-M1-C)/(R1-R0)
S<(M0-M1-C)/(R1-R0)
Transcribed Image Text:Consider the following model of immigration to the United States. Potential migrants originate
in country 0, the source country. For each individual, lifetime income if they remain in the source
country (denoted by YO) is given by the equation
YO = MO + RO(S)
%3D
where S measures the skill level of each person, with positive values of S indicating above-average
skills, negative values of S indicating below-average skills, and S equal to zero for the average
person. Lifetime income if a person immigrates to the United States (denoted by Y1) also varies
with skills, as described by the equation
Y1 = M1 + R1(S)
The parameters MO, M1, RO, and R1 characterize the lifetime income distributions in the two
countries. Let C represent the total costs incurred when immigrating to the United States,
including any psychic costs associated with leaving one's home country. Assume the following:
MO>M1-C>0
and
RO>R1>0
Assume that individuals seek to maximize their lifetime income.
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