Suppose there are two countries. In the rich country, the representative consumer has Hr units of human capital, and the total factor productivity is zr. In the poor country, the representative consumer has Hp units of human capital, and the total factor productivity is zp. Assume that b and u are the same in both countries, Hr > Hp, and zr > zp. 

(a) How do the levels of per capita income, the growth rates of per capita income, and real wages compare between the rich and poor countries? 

(b) If consumers could choose their country of residence, where would they want to live? 

(c) If each country could determine immigration policy, what should they do to maximize the welfare of the current residents? 

(d) What is the immigration policy that maximizes the welfare of the citizens of both countries? 

(e) Explain your results. Do you think this is a good model for analyzing the effects of immigration? Why or why not? 

(f) During the NPC & CPPCC, the State Councilor Wang Yong claimed when he was introducing the plans of institutional reform of the state council to the congress that, they are planning to establish the state immigration administration, which will be responsible for foreigners’ stay and residence, and the management of permanent settlement, refugees and nationality, etc. Explain what this means referring to the model in the textbook.

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Ansa The real wages per capita income and growth rates are higher in rich country as compare to poor ... View the full answer