The Economics of Immigration 2nd Edition by Cynthia Bansak

Exercise 5

Suppose a person has a utility function that increases linearly with net income. The person's present value of lifetime earnings in the origin is $250,000. The person is deciding whether to move to destination A, with lifetime earnings of $275,000 there, and destination B, with lifetime earnings of $300,000 there. In what range of migration costs to destinations A and B does the person prefer to move to A than to B? What must migration costs to destinations A and B be if the person chooses not to migrate at all?