Labor economics

Suppose that an engineer is deciding whether or not to move to northern Virginia or remain at his current job in Milwaukee. It costs $10,000 for this person to move from Milwaukee, which includes both actual and "psychic" costs. If she plans on working 2 more periods and will make $110,000 in each in Milwaukee, what is the minimum earnings necessary to induce her to move to northern Virginia? Assume a .10 discount rate.

Labor economics

Consider an economy that consists of two regions-the North and the South. The elasticity of labor demand in each region is -0.5. The economy-wide labor supply is perfectly inelastic. The labor market is initially in equilibrium, with 600,000 employed in the North and 400,000 in the South at the wage of $15/hour. Suddenly, 20,000 people immigrate from abroad and initially settle in the South. They possess the same skills as the native population and supply labor inelastically. (a) What will be the immediate impact on wages in each of the regions in the short run (before any migration between the North and the South occurs)? (b) What will be the effect of this immigration on wages in eac... click for more

Labor economics

3. Fleeing political tyranny in country X, assume that 100,000 residents of X leave the nation en masse to a nearby city (City A) in a bordering country (call it country Y) that is democratic. Researchers in Y are interested in how the influx of new labor into Y has affected the local labor market of city A. They have collected the following information: Unemployment rate of native country Y residents in: City A Before influx of X residents 6% After influx of X residents 8% Other cities in country Y (where no one moved to) Before influx of X residents 7% After influx of X residents 10% (a) What was the change in the unemployment rate for native residents in City A after the ... click for more

Labor economics

4. Suppose that a worker's skills can be summarized by the number of efficiency units she owns and the distribution of efficiency units in the population such that worker 1 has one efficiency unit, worker 2 has 2 efficiency units, and so on. There are 100 workers in the population of the country of Vin. In deciding whether to move to the U.S., Vinians compare their weekly earnings in Vin (wv) and their potential earnings in the U.S. (ws). The relationship between wages and skills are wv = 700 + 0.5e ws = 670 + e where e gives the number of efficiency units. (a) Assuming no migration costs, what is the immigration rate of Vinians (i.e., the fraction of the total population that m... click for more

Labor economics

Suppose that that marginal revenue and marginal cost of job search are MR=50 - 1.5w and MC = 5 + w. (i) What is the worker's asking wage? (ii) Would the worker accept a $15 wage offer? (iii) Would anything change if unemployment benefits were reduced such that the y-intercept of the MC curve increased four-fold. Show graphically.