Worker Mobility Flashcards
What is Worker Mobility?
the movement from one job to another
When do workers move?
If the expected benefits outweigh the costs
Why is present value used?
To account for migration costs and benefits occurring at different times
What is present value of Net Benefits?
( Σ Bt / (1+r)t ) – C - (to the power of t)
Where:
Bt = increased utility in time t from change
T = Years working after change
r = Discount rate
C = moving costs (utility lost in the move)
Under what conditions are individuals more likely to move?
- When difference in wages or salaries is large
- the worker is unhappy in his or her current job or location,
- the direct cost associated with moving is low, and
- benefits will be realized over a longer time period (T)
Are moves more strongly affected by “pull” of new location or “push” from original location?
affected by “pull” of new location over “push” from original location
Why are most moves within county and country boundaries?
- Information costs are higher in more distant locations
- Moving costs, especially psychic costs (e.g. stress), are also higher
What are the two sources of return migration?
- Initial migration was a mistake
- Incorrect expectations
- Unexpected change(s) - Repeat or return migration maximizes expected lifetime utility
e.g. attorney takes temporary position in Brussels to learn about EU tax law
- Individuals with low psychic moving costs continue to look for best job match in EU
How do migrants and immigrants differ from the rest of the population?
They are self-selected
- They typically have a lower discount rate than non-immigrants - they care more about future rewards than present ones
- They tend to be younger
- They tend to be healthier
What is immigration affected by?
the level of income inequality in the sending and receiving countries
When sending countries have a lower degree of income inequality than the receiving country
- the return to human capital is likely to be higher in the receiving country
- skilled individuals are more likely to emigrate to the receiving country
When there is a higher degree of income inequality in sending countries
low-skilled individuals are more likely to emigrate to the receiving country
- The Roy model illustrates these points
How is inequality measured in graphs?
the steepness of the line
- the flatter the line the more equal
- the steeper the line the less equal
The steeper the line
the higher the income inequality
What are direct costs and benefits that present value takes into account?
Costs:
- Friendship with co-workers and members of the community
- Family ties
- Working environment
Benefits:
- Non pecuniary job benefits (perks of a job that do not involve direct monetary compensation e.g., option for remote work
- Characteristics of geographical location
What determines the skill composition of the immigrant flow
relative payoff for skills across countries
What happens if payoff for skills declines in the receiving country?
The effect of a recession in the receiving country
With rising female labour-market participation, what are increasing?
the number of tied movers and tied stayers is increasing
- there is a sizeable increase in migration of highly-educated couples moving to urban areas to increase labour-market prospects
What is a tied stayer?
an individual who remains in their current job due to constraints or ties, often due to household considerations
What is a tied mover?
someone who relocates primarily due to the needs of their spouse or family, even if it means personal or professional sacrifices
Describe/draw the immigration graph?
- Immigration shifts supply curve to the right
- assumes that labour supply is more elastic
- more immigrants willing to do jobs at lower wages than natives
at w2, domestic supply is N3 of overall N2 - In absence of immigration, domestic employment would rise to N1 and wages would rise to W1
In the immigration graph, would removing immigrants create the same number of jobs for citizens?
No. N2 - N1 jobs would be eliminated by raising wages
What is the effect of immigration on demand?
shifts demand to the right.
- see a shift in industries where immigrants are perfect complements
e.g., agriculture,
- this frees up natives for higher-skilled jobs
What are an increase in migration costs equivalent to?
a reduction in payoff to skills