Lecture 17 - Lecture 17 Lecture 17 Mobility Roadmap Roadmap...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
ecture 17 Lecture 17 Mobility
Background image of page 1

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

View Full DocumentRight Arrow Icon
oadmap Roadmap obweb model of mobility 1. Cobweb model of mobility 2. Mobility (Geographic/Sectoral) 3. Roy Model 4. Immigration statistics and stylized facts
Background image of page 2
obweb Model of Adjustments Cobweb Model of Adjustments • Changes in labor g supply do not happen immediately (for xample nurses and example, nurses and engineers take years to train). • This could lead to cycles in wages and supply as the equilibrium is r ached. eac ed
Background image of page 3

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

View Full DocumentRight Arrow Icon
xpectations Expectations Adaptive Expectations – Expectations of the future value of an economic variable are based on past values. For example, eople might predict inflation by looking at inflation people might predict inflation by looking at inflation last year. Under adaptive expectations, if the economy suffers from constantly rising inflation rates, eople would always underestimate inflation people would always underestimate inflation. Rational Expectations eoples expectations of the sum of all decisions of all – Peoples expectations of the sum of all decisions of all individuals and organizations, filtered through market institutions, is not systematically wrong. (That is, economic agents generally have a good sense of what the market outcomes will be in the future.)
Background image of page 4
he Cobweb Model The Cobweb Model xpectations are adaptive. Expectations are adaptive. • Labor supply does not adjust immediately.
Background image of page 5

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

View Full DocumentRight Arrow Icon
Step by Step Since supply does not Change immediately, wage Old Demand New Demand W Goes to W1>W* At this high wage, supply over adjusts to L1 W1 With the over adjustment Of supply the wage falls o W2 W2 0 W* To W2 As the wage falls, supply Shifts in to L2 W0 This continues until we get to the equilibrium age and employment wage and employment Supply Labor L0 L1 L2 L*
Background image of page 6
Background image of page 7

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

View Full DocumentRight Arrow Icon
uestion Question hould the government subsidize Should the government subsidize engineering if there is a sudden increase in demand and wages are high? Why or why not? – It may actually be rational for the government to increase tuition in engineering if people verreact due to adaptive expectations overreact due to adaptive expectations.
Background image of page 8
obility Mobility eographic mobility*
Background image of page 9

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

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/09/2010 for the course ILRLE 2400 at Cornell University (Engineering School).

Page1 / 32

Lecture 17 - Lecture 17 Lecture 17 Mobility Roadmap Roadmap...

This preview shows document pages 1 - 10. Sign up to view the full document.

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