BAR11S.13IE - Dr. Christine M. Shaw [BAR11S.13IE]...

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Dr. Christine M. Shaw [BAR11S.13IE] International Economics Outline for Week 8 I. Week 7 “highlights”: FDI and international migration A. Labour market effects 1. Figure 2. US wage > Mexican wage a. With migration → US labour supply shifts right expands) and Mexican labour supply shifts left (contracts) b. US wage ↓ and Mexican wage ↑ 3. Process continues until wage US = wage Mexico B. Who gains/who loses (Figure 9.4, p. 332, 13 th edition) 1. Labour gains real income while other factors lose income a. Other factors lose more than remaining workers gain b. Part of what the other factors lose is gained by labour – but part is simply lost because output falls after migrants go 2. 3. A similar – but reverse – redistribution of welfare occurs in host country a. Workers already working there see their income fall b. Other factors enjoy a rise in income 3. Immigrants gain more in host country than lost when they left country of origin a. This gain is what motivates the immigration C. Hot migration issues 1. Remittances 2. Brain drain 3. Possibility of negative externalities 4. Costs of government services II. Balance of payments A. Definition 1. The BOP is a summary statement in which, in principle, all the transactions of the residents of a nation with the residents of all other nations are recorded for a particular time period, usually a calendar year 2. Since millions of transactions cannot appear individually → it is a consolidated statement 3. An international transaction = the exchange of a good, service or asset between residents of one nation and residents of another
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BAR11S.13IE - Dr. Christine M. Shaw [BAR11S.13IE]...

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