Question
Suppose a worker current lives in Location C and is deciding whether or not to move to Location D. We can again use a three-period
Suppose a worker current lives in Location C and is deciding whether or not to move to Location D. We can again use a three-period model to represent the remaining work periods left in this worker's life cycle. If the worker stays in Location C, he will earn $17,157 for each of the three periods. If the worker moves to Location D, he will earn $24,932 for each of the three periods. What is the highest cost of migration that this worker is willing to incur and still make the move (i.e. the migration cost at which the worker becomes indifferent between staying and going)? Suppose this worker has a discount rate of 10%. (Hint: If you are wondering whether this is the same thing as the previous question, you are on the right track.)
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