Unit 10-12 Review: Family Policy and Immigration Economics

Material betterment or GDP

Population used as a proxy by Adam Smith according to Maria Pia Paganelli.

Malthusian population principle

Malthus' principle that food production increases arithmetically while population size increases geometrically, leading to potential shortages.

The Population Bomb

A book by Paul Ehrlich stating that overpopulation would lead to hundreds of millions starving in the 1970s, which was incorrect.

Julian Simon's view on population growth

Simon believed that population growth does not cause short-run economic problems, but can lead to scarcity; however, it promotes innovation and improves living standards in the long run.

Current world population

About 8 billion people.

World population in 1800

About 1 billion people.

Divorce and fertility rates in the Soviet Union

After the ban on religious marriage, divorce rates increased and fertility rates decreased.

Threat of families to central planners

Families represent loyalty, identity, and self-sufficiency, threatening state control and are viewed as an oppressive institution.

Family unfriendly government policy example

Housing regulation, occupational licensing, childcare regulation system, marriage penalties in tax code, lack of school choice.

Paradox of family policy

Government policy can negatively impact birth rates but has little positive effect.

OECD countries with highest fertility rates

Israel.

OECD countries with lowest fertility rates

South Korea.

Groups that benefit from immigration

Immigrants, business owners/employers, and consumers.

Effect of immigration on native workers' wages

Immigrant labor often complements native labor. Low-skilled immigrants are typically less skilled than low-skilled native workers.

How immigration contributes to economic growth

Immigration moves resources—human ingenuity and labor—to where it is valued more. Labor is valued more, and hence earns higher real returns, in wealthy countries because it is more productive there.

Emigration and economic development

Economic development lowers the transaction costs of emigration and increases the potential opportunities for emigrants.

Productivity of low-skilled workers in the US

The United States has more stable and productive institutions, more capital, and more technological innovation. The Haitian worker will therefore have a higher marginal product in the United States than in Haiti.

Immigrants' impact on labor markets

False. Immigrants are responsible for a substantial amount of job creation and economic development in America.

Fortune 500 and immigrants

40% of the Fortune 500 were founded, for example, by immigrants or their direct descendants.

Effects of immigration on native wages

The empirical record suggests that immigrants have relatively small effects on native wages, even when immigration occurs suddenly and in large numbers—this is the conclusion of the study on the Mariel boatlift.

Income distribution and production

Income is earned in the process of production and exchange. There is no central income distributor in a market economy.

Resources determining income distribution

The most important kind of resource in determining the distribution of income is the ultimate resource, human ingenuity and skill. This is often described by economists as 'human capital.'

Connection between income and consumer demands

Income is determined by the supply and demand for labor. The demand for labor is derived from the demand for the goods and services that labor produces.

Income Determination

A person's income is determined indirectly by the contribution that the person's labor makes to satisfying consumer demands.

High Earnings of CEOs and Athletes

CEOs and professional basketball players are in very high demand but very short supply, making them highly productive individuals whose high productivity drives their earnings.

Compensating Differential

A compensating differential is the additional amount of income that a given worker must be offered in order to motivate him to accept a given undesirable job, relative to other jobs that worker could perform.

Demand Curve for Labor

As real wages increase, the quantity of labor—i.e., the number of workers—demanded by employers decreases.

Substitutes for Low-Skilled Workers

Two substitutes for low-skilled workers are machines or capital goods and high-skilled workers.

Increasing Marginal Value Product

A worker's marginal value product can be increased through job experience, training, and some forms of formal education.

Increasing Average Real Wages

The only way to increase average real wages in an economy is by enhancing worker productivity.

Benefits from Minimum Wage Increase

Low-skilled workers who keep their jobs after the wage hike and don't experience a reduction in hours or non-pecuniary benefits will gain from increases in the legal minimum wage.

Groups Harmed by Minimum Wage Laws

Young, low-skilled workers are most harmed by minimum wage laws because they often have marginal value products that are lower than the legal minimum wage.

Impact of Minimum Wage Increase

An increase in the minimum wage by 33% does not necessarily mean a positive net effect on workers, as it could lead to a reduction in hours or benefits.