question 5. Please answer all the questions with steps, thank you !!!! 5. The fi
ID: 2782881 • Letter: Q
Question
question 5. Please answer all the questions with steps, thank you !!!!
5. The first group of Mexican immigrants arrived at U.S. in 1960. They were at the age of 20 and earned 830,000. After 40 years of experience in the U.S., their salary increased from 830,000 to S60,000 in 2000. The second group of Mexican immigrants arrived at U.S. in 2000. They were at the age of 20 and earned S20,000 in 2000. a. What is the return from one year of experience for the first group of immigrants? (Assume that the linear relationship between the years of experience and the earnings) b. Suppose that what we observe in 2000 is the earnings of the first and the second immigrants and their ages in 2000. What is the return from one year of experience calculated by this information?Explanation / Answer
a. What is the return from one year of experience for the first group of immigrants? (Assume that the linear relationship between the years of experience and the earnings)
Salary increased from $30,000 to $60,000
Total increase in amount of salary = $60,000 - $30,000 = $30,000
Total time period = 40 years
Therefore increase in salary per year = $30,000 / 40 = $750 per year (Assuming linear relationship)
The return from one year of experience for the first group of immigrants
= increase in salary for a year/ salary earned in year 1
= $750 / $30,000 = 0.025 or 2.5%
b. Suppose that what we observe in 2000 is the earnings of the first and the second immigrants and their ages in 2000. What is the return from one year of experience calculated by this information?
The earnings of the first immigrants are $60,000 per year and their ages are 60 years in 2000 and the earnings of the second immigrants are $20,000 and their ages are 20 years in 2000
Suppose the increase in salary per year is $750 in 2000 also
Then the return from one year of experience for first immigrants in 2000 = $750 / $60,000 = 0.0125 or 1.25%
For second immigrants, the base salary in 2000 is $20,000 and their ages in 2000 is 20 years
Therefore the return from one year of experience for second immigrants in 2000 = $750/ $20,000
= 3.75%
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.