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0 Suppose we have two cities: Philadelphia and Pittsburgh. Individuals expect to live 10 years, face an interest rate of 0% per year and have

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0 Suppose we have two cities: Philadelphia and Pittsburgh. Individuals expect to live 10 years, face an interest rate of 0% per year and have to pay $10 to move. Workers in each city have a yearly labour supply given by h*(w) = 5 (e.g., workers always work 5 'hours' a year). Firms face competitive input and output markets and the yearly production technology of firms in each city is f(k, I) = 2W and firms get $10 per unit produced (so wages will be yearly). Suppose that both Philadelphia and Pittsburgh have 100 workers and 20 firms. Suppose 50 new workers appear in Philadelphia. 0 Q. What would be the wages in Philadelphia and Pittsburgh without internal migration? Would Pittsburgh's wage fall by more or less than 10 cents under internal migration (compared to no migration)

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