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ECON0041 Migration and Job Search Problem Set 4 UCL
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A copy of the 2022/23 problem set 4 (with solutions) for ECON0041 Economics of Migration and Job Search. Final mark: 75%
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Economics of Migration and Job Search: Problem Set 4Suphanit Piyapromdee
March 7, 2023
1. Suppose you use a cross sectional data to estimate the wage profiles of immigrants.
Use a diagram to show the possible bias for the wage growth if the cohort quality
rises over time.
Solution: If entry wages of immigrants change over time as the cohort quality changes,
then this may be picked up by the coefficient on the years since migration variable,
confounding differences in immigrant cohort quality with assimilation. Lower initial
wages of subsequent cohorts may lead to an overestimate of cross-sectional wage
profiles, while improvement in cohort quality in this case leads to an underestimate.
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