The distribution of skills is the same in Low Rock as it is in High Rock.The return to each unit of skill is the same in Low Rock, regardless of how much skill one has.The returns to skill in High Rock, however, depend on one's skill level.Workers at the low end of the skill distribution in High Rock receive very little return on their skills (less than they would receive in Low Rock), while workers at the high end of the skill distribution in High Rock receive a very high return on their skills (more than they would receive in Low Rock).Assuming that people are free to migrate from Low Rock to High Rock but not the other way around, the Roy model predicts which of the following outcomes?
A)The average skill level in Low Rock will increase, while the average skill level in High Rock will decrease.
B)The average skill level in Low Rock will decrease, while the average skill level in High Rock will increase.
C)The average skill level in Low Rock will remain unchanged, but the average skill level in High Rock will increase.
D)The average skill level will increase in both locations.
E)The average skill level will decrease in both locations.

Question

Quizplus · Accepted Answer

According to the Roy model, individuals will migrate from Low Rock to High Rock in order to receive higher returns on their skills. This will result in the average skill level in Low Rock decreasing, as those with higher skills leave, while the average skill level in High Rock increases, as high-skilled individuals migrate there. Therefore, the correct answer is B.

The Distribution of Skills Is the Same in Low Rock