lec13 - ECONOMICS 175 Professor Ronald D. Lee 3/03/09...

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ECONOMICS 175 Professor Ronald D. Lee 3/03/09 Lecture 13 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. Announcements Readings for Thursday: Douglas S. Massey (pg 335-353 in the reader). The midterm will cover the whole section on immigration, up to and including this Massey article. Bring your iclicker to the midterm. You do not need bluebooks. See bSpace for old midterms and finals to get a better understanding of the kinds of questions that will be asked. Make sure to practice using the various theory diagrams. There will be a review session on Sunday and one done by me on Monday evening. The locations and times will be known on Thursday. Problem set 3 will be returned on Thursday and comments on your paper topics will be on bSpace. Remember, wages of domestic workers does not mean people who work in the home. It means workers who are already in the US before additional immigrants arrived. The domestic labor force or population includes those born in the US and those who immigrated earlier than the time we are going to be looking at. Gains from Immigration We have an MPL curve that tells us if this many people were employed, how much one additional worker would contribute to output. It is declining because of diminishing returns. We have a certain amount of capital and the more we add workers, the less they contribute. See Pindyck and Rubenfeld, who discuss this. Here we imagine there are L 0 domestic workers, or this many initial workers in the US. The marginal product of that many workers is w in a competitive labor market. The total wage bill, rather the amount of wages paid in the economy, is the area of this rectangle that is shaded in red. We also want to know how much income goes to the owners of capital. Say we start with zero workers and add one worker. They add to productivity the MPL of one worker. Total output would be the area under the MPL curve from 0 to 1. If we add another worker, they will have a lower MPL and the area under the curve MPL from 1 to 2 would represent their contribution. The point is that total output is the sum of all these bars for each individual worker up till the aggregate number of workers we have, in this case L 0 . This area less the wage bill (shaded square) is the amount going to the owners of capital (the triangle).
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ECONOMICS 175 ASUC Lecture Notes Online: Approved by the UC Board of Regents 3/03/09 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. 2
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This note was uploaded on 01/28/2010 for the course ECON 175 taught by Professor Lee during the Spring '08 term at Berkeley.

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lec13 - ECONOMICS 175 Professor Ronald D. Lee 3/03/09...

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