answer each questions on the test. The goal of the problem sets is to help you prepare for theexams and keep track of the material. You will get full credit on the problem sets as long as you hand them in on time.
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
ECN 190
Economics of international migrations
Problem Set 1
Please submit your answers online using Canvas.
Multiple choice questions
1. In the US, relative to the fraction of immigrants in the population, the fraction of
immigrants in the labor force is:
a. Lower
b. Similar
c. It is not possible to know without further information.
d. Higher
e. None of the above
2. The largest immigrant group in the US are:
a. Naturalized citizens
b. Permanent lawful residents
c. Unauthorized immigrants
d. Refugees
e. Temporary lawful residents
3. The quota system that was established in the US in 1921 was designed to mainly
discourage the migration of:
a. Asians
b. Southern and Eastern Europeans
c. Northern Europeans
d. Latin Americans
e. Refugees
4. In the standard Roy/Borjas model of immigrant selection, an increase in the returns to
skill in the destination country will cause:
a. Immigrants to become on average more educated
b. Immigrants to become on average less educated
c. It is not possible to know. Depends on how large is the increase
d. It is not possible to know. Depends on whether immigrants were initially
positively or negatively selected
e. None of the above
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
5. In the Roy-Borjas model of immigrant selection, an increase in the fixed cost of migrating will
have the same consequences of:
a. An increase in earnings for the unskilled in the destination country
b. A decrease in earnings for the unskilled in the destination country
c. An increase in returns to skill in the destination country
d. A decrease in returns to skill in the origin country
e. None of the above
6. If return immigrants were positively selected (that is, those who make more money in the
US were the ones more likely to return to their countries of origin), measuring the
progress of immigrants in the labor market based on data following cohorts of
immigrants over time will tend to:
a. Overestimate the progress of immigrants over time
b. Underestimate the progress of immigrants over time
c. Neither overestimate nor underestimate
d. Underestimate, but only if native’s labor market outcomes were improving over
time
e. None of the above
7. Assume that: (1) Return migrants are positively selected (that is, those who make more money in
the US are the ones more likely to return to their countries of origin), and (2) the entry earnings
(that is, how much immigrants make on average on their first year in the host country) are
decreasing across different arrival cohorts. Under these assumptions, measuring the progress of
immigrants over time using data from a single year will:
a. Overestimate the progress of immigrants over time
b. Underestimate the progress of immigrants over time
c. Accurately measure the progress of immigrants
d. Underestimate, but only if native’s labor market outcomes were improving over time
e. It is not possible to know without further information
8. Assume you are interested in measuring the economic progress of immigrants over time.
However, you only have data following “cohorts” of immigrants. When using such data, which of
the following would lead to an incorrect measurement of the progress of immigrants in the labor
market?
a. Immigrants who are doing well in the labor market might be less likely to return to their
countries of origin
b. Immigrants who are not doing well in the labor market might be more likely to be missed
by government surveys
c. Those who entered the US in 1980 had higher earnings than those who entered in 1990
d. a and c
e. a and b
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
Short answer questions
1. Explain the reasons why indentured servitude started to be used to bring workers to the
Americas.
2. Provide two reasons why migration rates out of Europe accelerated in the 1850s.
3. Assume you are a researcher interested in testing the Roy/Borjas model of selection. You have
access to two datasets. The first dataset contains information on the educational attainment of
people moving from Texas to California, and on the educational attainment of those staying in
Texas. The second dataset has information on the educational attainment of people moving from
Brazil to the United States, and on the educational attainment of Brazilians who stayed in Brazil.
Which of the two datasets would you use to test the model? Why? Which additional information
would you need?
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
4. Feliciano (2000) studies the selectivity of immigrants with respect to educational
attainment. Why is it important to correct for differences in the age structure when
comparing immigrants to stayers with respect to educational attainment?
5. Feliciano (2000) establishes that Puerto Rican immigrants in the US have less education
than Puerto Ricans who stayed in Puerto Rico. Why is the selection of Puerto Rican
immigrants negative with respect to educational attainment? Explain
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
Problem
Consider a situation in which there are just two countries: an Origin, and a Destination country.
Wages in the origin country are given by:
wo=10+5s
where s are years of schooling.
Wages in the destination are given by:
wd=5+10s.
where s are years of schooling.
Migrating from the Origin to the Destination country requires paying a fixed cost of 10
corresponding to a Visa fee.
a. Draw a figure in which the y-axis represents wages net of migration costs in each of
the countries, and the x-axis represents years of schooling.
b. How many years of schooling do you need to have so as to be indifferent between
staying in the Origin country and moving to the destination Country?
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
c. Are immigrants from the Origin to the Destination positively or negatively selected
with respect to years of schooling?
The politicians are worried that only immigrants with relatively little education are moving to the
destination country. To remedy this issue, they decide to adopt a “points-system” to decide
which immigrants are allowed into the country. In particular, they decide that immigrants with
more schooling should pay a lower Visa fee. The visa fee is set equal to:
Visa Fee=10-2.5s
That is, the more years of schooling you have, the lower the migration cost that you pay.
d. What is the effect of the policy on the total number of immigrants?
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
e. What is the effect of the policy on the years of schooling of immigrants?
f. Does the policy have the intended effect? Explain
Data analysis
A group of researchers are interested in measuring the extent to which immigrants “catch-up”
with natives in the labor market. They have access to earnings data from the 2010 US Census of
population. The group of researchers found that average earnings in the 2010 census looked like
in the following table:
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University of California, Davis
Economics
Santiago Perez
Winter 2019
Name: _____________________________
ID:_________________________________
Group
Natives
Immigrants who spent 0-10 years in the US
Immigrants who spent 10-20 years in the US
Average
Earnings
($)
1000
500
750
Immigrants who spent 20 years in the US
1000
From the information compiled, the researchers concluded that, after 20 years in the US,
immigrants on average completely erased the earnings disadvantage with respect to natives.
Discuss whether the conclusion that they reached is correct and what are the challenges for their
interpretation of the evidence.
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