University of California, Davis Economics Santiago Perez Winter 2019 Name: _____________________________ ID:_________________________________ ECN 190 Economics of international migrations Problem Set 2 Multiple choice questions 1. Relative to their parents, second-generation immigrants in the US tend to be: a. More educated, but earn less b. Less educated and earn less c. More educated and earn more d. Similar levels of education but earn more e. More educated, but earn a similar amount 2. If immigration increases labor demand in the destination country, and natives and immigrants are perfect substitutes, immigration will cause native’s wages in the destination country to: a. Increase b. Decrease c. It is not possible to know without further information. Will depend on how large is the increase in demand relative to the increase in supply d. Increase for some workers and decrease for others e. None of the above 3. According to our discussion in lecture, which of these groups is the one whose labor market outcomes are more likely to be negatively affected by immigration? a. Natives in communication-intensive occupations b. Natives in manual-intensive occupations c. Previous immigrants in communication-intensive occupations d. Previous immigrants in manual-intensive occupations e. Refugees 4. In the standard model of the labor markets impacts of immigration: a. Immigration increases overall welfare b. Immigration decreases overall welfare c. Immigration decreases welfare in the destination country, but increases it in the origin country d. Depends on how many individuals move from the origin to the destination e. None of the above 5. In the standard model of the impacts of immigration, if labor demand was perfectly elastic, immigration will cause: a. Native wages to go up 1 University of California, Davis Economics Santiago Perez Winter 2019 Name: _____________________________ b. c. d. e. ID:_________________________________ Native wages to go down Wages to go down for some native workers but up for others No change in native wages None of the above 6. When evaluating the labor market performance of an ethnic group, “ethnic attrition” will lead researchers to: a. Underestimate how well the group is doing b. Overestimate how well the group is doing c. Depends on who chooses to stop self-identifying with the group d. Reach the same conclusions as if there was no “ethnic attrition” e. Depends on the size of the ethnic group 7. Consider the case in which immigrants and natives are complements. An increase in the number of immigrants will: a. Increase the wages and the employment of natives b. Decrease the wages and the employment of natives c. Increase the wages of natives, but decrease their employment d. Decrease the wages of natives, but increase their employment e. It is not possible to know. Depends on how large is the inflow of immigrants 8. Consider the model with two types of labor: skilled and unskilled. Initially, there are 5 skilled workers and 10 unskilled workers in the economy. Assume that 3 unskilled workers decide to emigrate. The skill premium (the relative wage of skilled to unskilled workers) in the economy will: a. Increase b. Decrease c. It is not possible to know without further information. d. Decrease, but only for natives e. None of the above 9. Consider the model in which labor demand is more elastic in the long than in the short run. Relative to the short run, the impacts of immigration on the long run will be characterized by: a. Smaller change in wages, smaller change in the number of employed workers b. Smaller change in wages, larger change in the number of employed workers c. Larger change in wages, smaller change in the number of employed workers d. Larger change in wages, larger change in the number of employed workers e. Similar changes in wages and the number of employed workers 10. In the standard model of the labor markets impacts of immigration, which of these groups does NOT benefit from immigration? a. Owners of other factors of production in the destination country b. Owners of other factors of production in the origin country c. Immigrants themselves 2 University of California, Davis Economics Santiago Perez Winter 2019 Name: _____________________________ ID:_________________________________ d. Other workers in the origin country e. All of the above 11. Card’s (1990) study on the impacts of Marielitos, estimates the effects of the 1980 Mariel boatlift on the Miami labor market by comparing: a. Wages of natives in Miami in 1979, to wages of natives in Miami in 1981 b. Wages of natives in Miami in 1981, to wages of natives in other US cities in 1981 c. Change in wages of natives in Miami from 1979 to 1981, to change in wages of natives in Miami from 1977 to 1979 d. Change in wages of natives in Miami from 1979 to 1981, to change in wages of natives in other US cities from 1979 to 1981 e. Change in wages of natives in Miami from 1979 to 1981, to change in wages of immigrants in Miami from 1979 to 1981 Short answer questions. 1. Abramitzky, Boustan and Eriksson (2016) use the names that immigrants give to their children to measure “cultural assimilation”. Explain the advantage of using this measure relative to conventional measures such as intermarriage and location decisions. 1. Assume you are interested in measuring the impacts of the 1980 arrival of Marielitos on Miami’s labor market. To do so, you decide to compare the labor market outcomes of native-born workers in Miami in 1979 to the labor market outcomes of native-born workers in Miami in 1981. Explain possible issues with such research strategy and discuss how you could improve it. Exercise Consider a situation in which there are just two countries: an Origin, and a Destination country. Labor demand in the origin country is given by: wo=10-Lo Labor demand in the destination country is given by: wd=14-Ld. where Lo and Ld indicate the number of workers in the origin and destination countries, respectively. Initially, there are 5 workers in the destination country and 5 workers in the origin country. Assume that labor supply is perfectly inelastic in both countries (that is, that labor supply can be represented through a vertical line). 3 University of California, Davis Economics Santiago Perez Winter 2019 Name: _____________________________ ID:_________________________________ a. Consider first the case in which individuals are not able to change their country of residence. What would be the equilibrium wage in the destination and in the origin countries? Illustrate your answer with a graph. b. Consider next the case in which workers can freely migrate across countries (at no cost). What would be the equilibrium wage in the destination and in the origin country? How many workers (if any) would migrate from the origin to the destination country? Illustrate your answer with a graph. The government in the destination country is worried about the potentially negative effects of immigration on the labor market. To address this issue, the government is considering the introduction of a “migration permit” that workers from the origin would need to buy in order to enter the destination country. c. Assume that the goal of the government is to maximize the money that they obtain from selling “migration permits” to workers in the origin country. The government is deciding between two possible prices for the migration permit: 2$ or 10$. Which of these two prices would you recommend to the government? Why? d. Assume that you are an owner of “other factors of production” (capital, land, etc) in the destination country. If you could choose any price greater or equal than zero, how much would you like the government to charge for the “migration permit”? Why? 4
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