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CHAPTER 10. WORKER MOBILITY: MIGRATION, IMMIGRATION, AND TURNOVER. In 1996-97, over 3 million workers moved between states 70 to 85 percent of movers cited economic reasons for the move. About one-half of all interstate moves are associated with a change in employment.

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chapter 10 worker mobility migration immigration and turnover
CHAPTER 10. WORKER MOBILITY: MIGRATION, IMMIGRATION, AND TURNOVER
  • In 1996-97,
    • over 3 million workers moved between states
    • 70 to 85 percent of movers cited economic reasons for the move.
  • About one-half of all interstate moves are associated with a change in employment.
  • Probability of an interstate move falls with age but rises with education.
  • More educated people are more likely to make long distance moves.
economic model of worker mobility
Economic model of worker mobility

PV of Net Benefits =

where

Bjt = $ from new job (j) in year t (mea

Bot = $ from old job (0) in year t.

T = number of years one expects to work at job j.

C = the utility lost in the move itself (“moving costs”)

r = discount rate

predictions from model
Predictions from model
  • A worker is more likely to move if:
    • young
      • more years to collect benefits
      • “psychic” costs are lower
      • peak years for mobility are ages 20-24 (12% move across state border each year)
      • by age 47, mobility rate drops to 4 percent.
    • costs of move are low
      • single versus family
      • effect of second earner in family
predictions from model4
Predictions from model
  • Net “out-migration” from an area will occur if wages fall in that area relative to other areas.
  • Short distance moves are more likely than long distance moves (C larger because of transportation costs and increasing cost of gathering information).
    • How will the growth of job information on the internet affect migration?
  • If one country has a higher return to education than another, more educated workers will tend to move to the country with the higher return.
u s immigration history
U.S. IMMIGRATION HISTORY
  • Prior to 1920, U.S. had essentially unrestricted immigration.
  • 1921, Quota Law passed.
    • set annual quotas based on nationality.
    • reduced immigration from eastern and southern Europe.
  • 1965: Immigration and Nationality Act
    • abolished the quota system based on national origin.
    • 1990 amendments allow:
      • 675,000 people per year.
      • 480,000 reserved for family reunification
      • 140,000 reserved for immigrants with exceptional skills
      • 55,000 reserved for “diversity” immigrants (immigrants from countries that have not recently provided many immigrants)
      • political refugees are permitted without limit.
  • Officially recorded immigration in 1996: 916,000
  • Illegal immigration estimated at 275,000 per year and 5 million in 1996.
slide8

Source:http://www.uscis.gov/graphics/shared/statistics/publications/USLegalPermEst_5.pdfSource:http://www.uscis.gov/graphics/shared/statistics/publications/USLegalPermEst_5.pdf

consequences of immigration
CONSEQUENCES OF IMMIGRATION

Immigrants reduce wages, increase total employment, but reduce employment of natives.

consequences of immigration11
CONSEQUENCES OF IMMIGRATION
  • Other considerations for labor market effects
  • elasticity of labor supply
  • elasticity of labor demand
  • What if immigrants are gross complements to skilled labor?
  • Immigrants may increase labor demand through increased product demand.
  • Evaluating immigration policy:
    • labor market effects
    • cost of goods and services.
    • tax revenues versus government services
        • evidence that those with above a high school education contribute more in taxes than they receive in government services; reverse for those with less than a high school education)
    • should immigration policy be driven more by “skills”, family reunification, diversity?
consequences of immigration12
CONSEQUENCES OF IMMIGRATION
  • Borjas (2003 NBER):
    • “immigration lowers the wage of competing workers: a 10 percent increase in supply reduces wages by 3 to 4 percent.”
  • David Card (2005 NBER):
    • “Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant.”
    • “On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least- educated immigrant origin groups have closed most of the education gap with the children of natives.”
job mobility
JOB MOBILITY

Determinants of job mobility:

  • compensation package
    • deferred pay
    • “efficiency” wages
    • Non-compete clauses
  • what causes firms to offer a package that reduces quits?
    • specific training
    • large hiring/screening costs
    • high monitoring costs (more on this later)
    • Trade secrets
  • men vs. women
    • men tend to receive more specific training and compensation packages that reduce turnover.
job mobility14
JOB MOBILITY
  • large vs. small firms
    • large firms tend to invest more in training and have higher screening costs: monitoring problems.
    • much of the reason large firms have lower turnover is that their pensions are designed to penalize quitters.
  • rural vs. urban areas.
    • easier to search in densely populated areas.
mobility costs and monopsony
MOBILITY COSTS AND MONOPSONY
  • For any given level of employment (Na + Nb), the firm will equate ME for each type of labor.
  • The more inelastic is labor supply, the greater is the difference between ME and W.
  • The more inelastic is labor supply, the lower the wage rate paid.
  • LESS MOBILE WORKERS ARE PAID LESS.
mobility costs and monopsony16
MOBILITY COSTS AND MONOPSONY
  • Applications of monopsony model
    • Married versus single
    • Urban versus rural
    • With vs. without children
    • Majority versus minority workers.