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Intermediate Microeconomics


9. Labor Mobility


The analysis of a competitive labor market reveals that the value of the marginal product of labor is the same across firms, making the equilibrium outcome efficient. However, the outcomes in the real world do not quite fit the predictions from the competitive model. There is a great deal of incomplete information between what workers and firms know. For example, workers are often inadequately informed about job opportunities in other areas, and firms are rarely able to measure the value of a worker's marginal product with any high degree of precision. In the Pencasts for this topic, we develop some simple models designed to help us think through individual and family decisions to migrate from one area to another. We also examine how demographic factors, migration costs, and self selection affect migration decisions.


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Migration Decision

This Pencast develops the basic human-capital framework for predicting migration decisions. It is shown that the present value of opportunities elsewhere and migration costs play critical roles in the decision to migrate. [Play Pencast]


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Age and Migration

This Pencast discusses how age and the probability of migration are related. It is shown that aging results in a lower probability of migration. [Play Pencast]


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Migration Costs

This Pencast uses the human-capital framework to shed light on why so little migration takes place. It turns out that migration costs might be a major inhibitor to migration. [Play Pencast]


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Family Migration

This Pencast covers family migration. We extend the human-capital model by looking at the net gain for migration to a family (i.e. a husband and wife). We show that the migration decision made by an individual is not always the same that would be made by a family. [Play Pencast]


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Age-Earnings Profiles of Immigrants and Natives

This Pencast provides the age-earnings profiles for immigrants and natives (on average). It is shown that immigrants typically earn less than natives when they are young but more when they are relatively older. In addition, the immigrant age-earnings profile is steeper than that for natives.[Play Pencast]


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Roy Model

This Pencast discusses the basics of the Roy model, and how it can be extended to the decision to move from one area to another. Negative and positive selection is discussed. [Play Pencast]


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Incomes, Migration Costs and Migration

This Pencast demonstrates that a decline in income or an increase in migration costs will reduce the number of people in the source country who migrate. [Play Pencast]


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