Quiz 22: Health Care
(a) If the daily minimum wage in Mexico is 60 pesos per day, and the exchange rate between pesos and dollars iS12 pesos per dollar, then we see that the Mexican minimum wage per day in terms of U.S. dollars is $5 per day. To see this, we have: (b) Since a Mexican can get $5 per day at minimum wage, if he works 8 hours a day, that would equate to about $0.63 per hour . (c) We can simply divide the Federal minimum wage of $7.25 per hour by the Mexican equivalent of the minimum hourly wage of $0.63 and get that the U.S. Federal minimum wage is about 11.5 times higher. We can get it by calculating . (d) The United States will be more likely to receive low skilled immigrants, if they are more likely to move to places where they can receive the highest compensation. Since the minimum wage in the U.S. is so much higher than that of Mexico, a low-skill immigrant would much rather work in the U.S. than in Mexico, since he can obtain more than 11 times his wage per hour by working in the U.S.
The chapter focuses on the economic issues related to immigrants in the United States. The following statement are required to be answered for being true or false. a. The given statement that more immigrants arrive to the United States each year illegally than legally is false. This is because, over years the United States has open its door for the immigrants across the world. The legal immigrant are the immigrants who are said to have permission of staying and working in the United States. The illegal immigrants are the immigrants who arrive illegally. The illegal immigrants also include the immigrants who have failed to leave after a specified period of time for which they were permitted. b. The given statement that the majority of the immigrants are men is false. This is because, according to the United States data for immigrants, 990553 were admitted as the legal permanent residents. Out of these, 55 percent were women and 45 percent were men. Thus, it the given statement is wrong as the majority of the immigrants are women. c. The given statement that over half the new legal immigrants to the United States each year are from Mexico is false. Though it is true that there are a large number of legal immigrants who have entered in the United States are from Mexico. However, in the Mexicans made up only 14 percent of the total immigrants. d. The given statement that most legal immigrants to the United States gain their legal status through employment-based preferences is false. This is because according to the data available for legal immigration by major category of admission in 2013, only 16% of immigrants get legal status on employment-based preferences. Most of the legal immigrants to the United States gain their legal status through family-sponsored (66%).
(a) Remember that the U.S. minimum wage is $7.25 and we are given that the minimum day wage for a Mexican worker is $5. On average, a Mexican worker works 8 hours a day, which means the minimum Mexican wage is about $0.63 per hour. Since a worker in Mexico can make one mug per hour, this means that each mug produced in Mexico has a labor cost of $0.63, since each mug requires one hour of work by the laborer, and each hour of work by the laborer cost $0.63. In the U.S., 14 mugs can be produced an hour by a worker. Since the labor cost for one hour of this worker's time cost $7.25, and the worker can make a mug in of an hour, the labor cost per mug is about $0.52 . (b) Each hour, a mug company in Mexico must pay its worker $0.63 while a mug company in the U.S. must pay its worker $7.25 per hour. Thus, we see that the labor cost per hour in the U.S. iS11.5 times higher than that in Mexico. In level terms, we see that the labor cost per hour in the U.S. is $6.62 higher than that of Mexico. (c) We found in part (a) that the labor cost per unit in Mexico is $0.63 per mug and the labor cost per unit in the U.S. is $0.52 per mug. Thus, the labor cost in Mexico per mug is $0.11 higher than that of the U.S. (d) No, higher labor costs per hour does not always imply higher labor costs per unit. We see from the above that even though the U.S. has a higher labor cost per hour, they have a lower labor cost per unit. This is because the U.S. has better technology and thus is more productive, which gives it a low labor cost per unit. However, the U.S. minimum wage is much higher than that of Mexico, which means that the labor cost per hour will be higher in the U.S. (e) The country that has firms with lower labor cost per unit is the U.S., and the country that has firms with higher labor cost per unit is Mexico. Thus, we see that the mug firms in the U.S. will increase in size and hire more workers (expanding), whereas the mug firms in Mexico will decrease in size and hire less workers (contracting). If unskilled pottery workers relocate to where they can find jobs, this means that these workers will move to the U.S., since the firms in the U.S. are hiring more and more workers because of its expansion.