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Suppose that the returns to education in terms of income are higher in India than in...

Suppose that the returns to education in terms of income are higher in India than in Bangladesh. Suppose further that there are no barriers to migration. Describe how India's economy would change in terms of growth and wages

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If the returns to education in terms of income are higher in India than in Bangladesh and further, that there are no barriers to migration, workers/ employees of both India and Bangladesh would want to work in India only.

According to the human capital theory, education is an investment that increases the market skills and productivity of individuals who undertake it. Consequently, these individuals earn higher wages in the labor market for their higher skills and productivity.

Since the Indian as well as Bangladesh's skilled workers would be working in India, India's GDP would rise. The growth in the wages of these skilled workers would be much higher. Thus, the Indian economy would grow rapidly as the proportion of educated workers increases since educated workers can more efficiently carry out tasks that require literacy and critical thinking.

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