Suppose a worker's skill is captured by his efficiency units of labor. In country A,the distribution of efficiency units in the population is such that worker 1 has oneefficiency unit, worker 2 has two efficiency units, and so on. There are 100 workers inthe population.In deciding whether to migrate to country B, these workers compare the present value oftheir future wage earnings at home (wa) with their potential wage earnings in countryB (wB).The relationship between wages and skills in each of the two countries is given byWA = 100 + sandWg = 110 + 0.75swhere s is the number of efficiency units of the worker.(a) Assume there are no migration costs. What is the efficiency of the marginalworker in country A, i.e. the worker who is indifferent between staying in countryA or moving to country B?(b) What is the average number of efficiency units among immigrants to country Bfrom country A? Assume that the marginal worker stays.(c) Suppose the cost of migrating from country A to country B is 5. Then what isthe efficiency of the marginal worker in country A?(d) What then is the average efficiency among immigrants?

efficiency unit, worker 2 has two efficiency units, and so on. There are 100 workers in the population. In deciding whether to migrate to country B, these workers compare the present value of their future wage earnings at home (wA) with their potential wage earnings in country в (wв). The relationship between wages and skills in each of the two countries is given by WA = 100 + s and wB = 110 + 0.75s where s is the number of efficiency units of the worker. (a) Assume there are no migration costs. What is the efficiency of the marginal worker in country A, i.e. the worker who is indifferent between staying in country A or moving to country B? (b) What is the average number of efficiency units among immigrants to country B from country A? Assume that the marginal worker stays. (c) Suppose the cost of migrating from country A to country B is 5. Then what is the efficiency of the marginal worker in country A? (d) What then is the average efficiency among immigrants?

efficiency unit, worker 2 has two efficiency units, and so on. There are 100 workers in the population. In deciding whether to migrate to country B, these workers compare the present value of their future wage earnings at home (wA) with their potential wage earnings in country в (wв). The relationship between wages and skills in each of the two countries is given by WA = 100 + s and wB = 110 + 0.75s where s is the number of efficiency units of the worker. (a) Assume there are no migration costs. What is the efficiency of the marginal worker in country A, i.e. the worker who is indifferent between staying in country A or moving to country B? (b) What is the average number of efficiency units among immigrants to country B from country A? Assume that the marginal worker stays. (c) Suppose the cost of migrating from country A to country B is 5. Then what is the efficiency of the marginal worker in country A? (d) What then is the average efficiency among immigrants?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 1P

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