Lecture 9 Labor Mobility PDF

Lecture 9 Labor Mobility PDF - Chapter 9: Labor Mobility...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 9: Labor Mobility Econ 339 Labor Economics Winter Quarter 2007 Sections: Chapter 5: 5.5 (incl. 1 st para. Page 186) Chapter 9: 9.0-9.6
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 The Decision to Migrate Economists think of the decision to migrate as a human capital investment You move if you expect to gain You stay put if you expect to lose An Individual (age 20) compares Present Value of Earnings in current location A (i.e. New York) Present Value of Earnings in potential location (i.e. California) MINUS migration costs
Background image of page 2
3 The Decision to Migrate Formally () () () () 45 65 3 23 2 22 21 20 1 ...... 1 1 1 r w r w r w r w w PV NY NY NY NY NY NY + + + + + + + + + = () () () () 45 65 3 23 2 22 21 20 1 ...... 1 1 1 r w r w r w r w w PV CA CA CA CA CA CA + + + + + + + + + = M PV PV NY CA = Migration Gain to Net
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Decision to Migrate Probability of migrating is higher if economic opportunities at the destination region improve if economic conditions in the home region deteriorate if migration costs decrease => Migration occurs when the worker can recoup his investment
Background image of page 4
5 Region Specific Variables and Migration USA is comparatively mobile 2.8% of population moved across counties within the same state (2000-01) 2.7% of population moved across states within the US (2000-01) Probability of Migration is sensitive to Income differences between regions Differential employment conditions Distance of Migration
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Worker Characteristics and Migration Demographic Characteristics that influence the probability of migration Age Education Migration is most common among younger, more educated workers
Background image of page 6
7 0 2 4 6 8 10 25 30 35 40 45 50 55 60 65 70 75 Age Percent Migrating College Graduates High School Graduates Migration by Age and Education 2000-01
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 Why isn’t there more migration Although US is relative (compared to the EU, for instance) mobile we learned that it takes 30 years until wage differences between regions are equalized Why? It seems that Migration Costs are very higher Example: Puerto Rican Migration
Background image of page 8
9 Why isn’t there more migration Citizens of Puerto Rico can migrate to the US Wages in US vs Puerto Rico in 2002 US: $46,000 PR: $21,000 Even after adjusting for differences in purchasing power this difference is large Over time 25% of Puerto Ricans moved to the US But 75% did not. Why? Let’s look at a numerical example
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10 () and 1 r w r PV PR PR + = ( ) r w r PV US US + = 1 Numerical Example Simplifying assumptions Wages are constant over time Individuals don’t die Then we can write the present value of the income stream at home and abroad as
Background image of page 10
11 () ( ) M r w w r PR US = + 1 PR w M = π Numerical Example A worker will be indifferent between moving and staying if the gain to migration equals the Migration cost Divide both sides by the Puerto Rican wage and define
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12 Numerical Example We get Assume:
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 73

Lecture 9 Labor Mobility PDF - Chapter 9: Labor Mobility...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online