T412:19 3A1908= . . . 87% owl.uwo.ca 18/18 Page 17 of 18 QUESTION 15 Consider the following table that shows the average earnings of various immigrant cohorts and the native born for 1995 and 2000 (all values expressed in year 2000 dollars). Average Earnings by Immigrant Cohort 1995 2000 Cohort Label YSM Earnings ($) YSM Earnings ($) Native-born Native N/A 46,999.14 N/A 48,641.17 Pre- 1950 M50P 47.5 60,164.80 52.5 60,989.24 1951-1955 IM5155 42 5 57,402.76 47 5 58,435.34 1956-1960 M5660 37.5 54,194.16 42 5 57,448.82 1961-1965 IM6165 32.5 51,363.79 37.5 55,029.48 1966-1970 M6670 27.5 52,992.43 32.5 56, 180.09 1971-1975 IM7175 22.5 48, 128.24 27.5 52,977.71 1976-1980 IM7680 17.5 43,786.13 22.5 48,733.17 1981-1985 IM8185 12.5 42,293.55 17 5 45,962.35 1986-1990 IM8690 7.5 36,580.27 12.5 41,587.70 1991-1995 M9 195 2.5 31,423.02 7.5 38,652.16 1996-2000 M9600 2.5 38,406.05 NOTE: "YSM" refers to the average years since migration a) Calculate the cross-sectional entry effect (in levels) for the 1991-95 (IM9195) cohort. Interpret. b) Use the 1995 cross-section to estimate the effect on earnings of being in Canada an additional 5 years for the IM8185 cohort, that is, the effect of being in Canada 17.5 instead of 12.5 years. Use this to predict IM8185's earnings in 2000. c) Compare your estimate from part (b) to IM8185 actual earnings in 2000. Provide a better estimate of the earnings assimilation of the IM8185 cohort. Explain and interpret. Compare this to the cross-sectional estimate from part (b) and suggest an explanation as to why they are different. Page 18 of 18