Skilled Laborers Discover that Migration is a Two-Way Street

1. Why do you think that these countries offer benefits such as free housing, tax-free income, etc, rather than simply offering higher salaries?

Offering benefits to everyone may be cheaper than offering individuals higher salaries alone, since average cost of offering a benefit such as free housing may be less than it will be valued by those receiving it. In other words, workers may be willing to trade off higher salaries in exchange for such benefits.

2. Why do you think the distinction between bringing in educated workers vs. uneducated workers exists? Why do countries try to bring in the former, and try to exclude the latter?

In terms of economic growth, skilled workers will be more valuable than unskilled workers. And since the pool of skilled workers globally is a scarce resource, countries want to do what is in their power to bring in as many as possible.

3. What impact do you think this migration process has on wages offered in the home country?

Over time, wages in the home country should increase, both as the skilled labor pool shrinks as a result of the migration, and also to keep the remaining skilled workers in the home country.

Multiple Choice/True False Questions

1. Tax breaks or other encouragements to remain in a foreign country are designed to change the _________ of remaining in that country.
  1. Sunk cost
  2. External cost
  3. Fixed cost
  4. Opportunity cost
      ANS. d

2. Skilled workers are offered higher wages because for people with those skills,
  1. Quantity supplied is less than quantity demanded
  2. Quantity demanded is greater than quantity supplied
  3. Quantity demanded is equal to quantity supplied
  4. No such workers exist.
      ANS. b

3. The fact that a diverse work force is seen by the young population in a country, and can grow to see that as the norm is a _________ from the migration process.
  1. Sunk cost
  2. External cost
  3. External benefit
  4. Opportunity cost
      ANS. c

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