ECON 232 Study Guide - Final Guide: Risk Aversion, Risk Premium, Atlantic Ocean
Document Summary
Choose y* years in new world to maximize. Y*is the optimal years determine age when you move. Unskilled labor increases, which is a good news for land owner ( unskilled labor and land are substitutes) Impact on other things like raw materials , . Y: number of years in the new world. Epvtb ow= includes immediate costs of moving, leaving families, friends, quit jobs, buying tickets, income earned if not move. Income/saving(saving is not really much in 19century)>=rent, food, ticket, while meeting before finding a job. If marginal benefits are always below marginal costs,majority of people never move. A weird person moves (special circumstances, unusual characteristics) Little variance on outcome staying in old world. Two ways to reduce risk: squeeze 10. 20 together. Love variance to moving i. e. high and low outcomes not far apart. Stage migration(within one country, move from farm to city) Chain migration(friend, relatives, take care of u, reduce the low outcomes.
