Week5 - Migration & Mobility

• define labour mobility

  the mechanism that labour markets use to improve the allocation of workers to a firm
• what flows of labour increase productivity

  flows from low to high productivity jobs
• what may happen during flows of labour

  unemployment
• how are mobility decisions guided

  by comparing present value lifetime earnings in alternative employment opportunities
• when does a worker decide to move

  if the net gain from moving is positive
• how would you represent mobility as an investment

  calculating the net gain and considering moving costs, M

  
  

  net gain from migration = PV1 - PV2 - M
• what are the implications of using mobility as an investment

  i. improvement in economic opportunities in destinations increases likelihood of migration

  
  

  ii. improvement in economic opportunities in current location decreases the likelihood of migration

  
  

  iii. increase in cost of migration decreases the likelihood of migration
• what is the arbitrage equation if individuals live forever and have the same mobility costs and wages are constant

  with no migration costs and perfect competition wages are equalised

  
• what is the arbitrage equation if agents live forever and have the same mobility costs but unemployment exists

  with no migration costs wages do not equalise if unemployment differs

  
  

  high wage areas should have higher unemployment rates

  
• who is it easier for to recuperate migration costs

  for younger people
• why is it easier for younger people to recoup migration costs quicker

  the time left to do so in a new location is longer
• what may be a possible determinant of low migration levels regarding families

  migrations decisions may not be made by a single agent but rather on a household level - the decision is then made according to whether the household is better off
• explain family migration and tied movers

  i. consider husband (h) and wife (w) which changes the decision to the changes in the PV of the husband and the PV of the wife

  
  

  ii. if the husband were single he would migrate whenever DPV>0 (areas A, B and C)

  
  

  iii. if the wife were single, she would move if DVP>0 (areas C, D and E)

  
  

  iv. the family migrates when the sum of the private gains is positive (Areas, B, C and D)

  
  

  v. in area D, the husband would not move if he were single but would move if he were a family - this makes him a tied mover

  
  

  vi. in area E, the wife would move if she were single but does not move as part of the family - this makers her a tied stayer

  
• what are power couples and what are the migration patterns

  power couples is where both agents have a university degree - they are more likely to co-locate in large metropolitan areas as its much easier for both to match jobs
• what is the relationship between natives and immigrants in production and what are the effects of this

  i. it is assumed that they are perfect substitutes causes the supply curve to shift out

  
  

  ii. employment increases

  
  

  iii. equilibrium wage decreases

  
• what are the effects of immigration on native workers

  i. wages fall

  ii. native employment falls

  iii. however native workers may be able to increase their productivity since they can specialise in tasks better suited to their skills

  iv. competing native workers will have lower wages

  v complementary native workers will have higher wages
• what is the short run impact of immigration when immigrants and native are complements

  
• what is the long run impact of immigration when natives and immigrants are perfect substitutes

  
• what is the native labour markets response to immigration

  
• draw and explain the immigration surplus

  - gives the increase in national income that accrues to natives

  
  

  - domestic workers lose

  
  

  - domestic capitalists gain

  
  

  - this model is ok when workers are perfect substitutes and capital is given

  
• draw and explain self-selection of the immigrant flow

  
• draw the impact of a decline in incomes

  
• how would you estimate the effect of immigration

  
• explain the Mariel Boatlift

  i. 1980: Cubans could move to the US freely from Mariel Port

  ii. 125,000 Cubans chose to do so within 6 months of the lift

  iii. most of them went to Miami

  iv. study shows that wages and unemployment in Miami were barely affected
• what is the age-earnings profiles of immigrant and native men in the cross section?

  
• what is the problem with cross-sectional data

  i. does not follow individuals over time but are a snapshot of a current situation

  
  

  ii. the slope of the age-earnings profile is affected by cohort effects
• explain what cohort effects are and how it relates to the Age-Earnings profile

  
• what are the empirical effects of immigration on school performance on natives

  i. a 10% increase in the share of immigrants in grade 5 raises the dropout rate of natives by 7-8%

  
  

  ii. a 10% increase in the share of immigrants in grade 5 reduces matriculation by less than 2%