Question

A housekeeper from the Philippines is contemplating immigrating to Singapore in search of higher wages. Suppose the housekeeper earns approximately $3,000 annually and expects to find a job in Singapore worth approximately $8,000 annually for a period of three years. Furthermore, assume that the cost of living in Singapore is $800 more per year than in Home.
a. What can we say about the productivity of housekeepers in Singapore versus the Philippines? Explain.
b. What is the total gain to the housekeeper from migrating?
c. Is there a corresponding gain for the employer in Singapore? Explain

Answer 1

Ans. a) The productivity of the housekeeper remains the same even if he is migrating from Phillipines to Singapore. The wages of the housekeeper might have increased on Singapore due to higher standard of living in Singapore and more assets with them.

b) Annual benefit to the housekeeper = $8000 - $3000 - $800 = $4200

c) The employer in Singapore might have paid lesser to the immigrant as compared to other housekeepers from Singapore. He could have done so since the housekeeper from Phillipines would have been more than pleased with the amount offered since he still ends up gaining even if he gets paid lesser than the local housekeepers. Thus, the employer in Singapore might also have had some gain.