read two long papers then answer the questions

Part A

The following questions are based on “Intergenerational Transmission of Abilities and Self-selection of Mexican Immigrants,”

1. Describe how earnings of Mexican immigrants evolved over 3 generations.

2. What story does the paper tell to explain these observations? How does it differ from Borjas’ (1993) conclusions and why?

3. Explain how the author models (i) education decision and (ii) immigration decision. What is the meaning of zIg, ξzIg, and ψ? Provide examples.

4. When discussing the role of altruism on pages 537-538, the author says ”The altruism drives the positive selection, and the greater it is, the stronger is the positive selection.” What does the author mean and how does it work?

Part B

The following questions are based on the paper ”A Theory of The Worst Form of Child Labour,”

1. In one short paragraph, state the main message of the paper and provide intuition using an example.

2. List the key features of the model: agents, endowments, preferences, technologies, decisions and markets. Try to do this without using formulas, characterizing the properties of relevant functions in words.

3. In the individual optimization problem (10), what trade-offs does the parent face when allocating time between school and work in a given industry?

4. Briefly explain how wages in the two industries are determined in equilibrium. Provide an intuitive explanation (in your own words!) on why the wage in industry B must exceed the wage in industry A in equilibrium.

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