Question

Consider wage rates and migration flows from the low-wage South to the high-wage North, describe one shift in conditions that, by itself, could have caused the set of changes to a rise in wage rates in both South and North, and additional migration from South to North. Explain the shift and your rationale in 2-3 sentences

Answer 1

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Abstract

Workers with both experience and in-demand skills usually earn more that workers in the same occupation that lack similar skills and experience. Location. Wages for workers in the same occupation, and position, can vary drastically from one state to another. This is usually a function of cost of living.

Underlying Factors for rise in wage rates in both South and North and migration shift from South to North

South: low wage

North : high wage

Whenever there is an additional migration from south to north, the the supply of labour will be less in south. So the existing labour may pressure to raise their wages.

On the other hand, when there is additional migration in north, there is excess supply of labour . So the demand of goods will be high which causes the price to be high.

Then the demand pull inflation will cause cost push inflation, ie existing wage rate will rise. When there is lack of demand of goods along with lack of demand of labourers then wage rate will fall further. ( south).

Due to excess supply of labour in north, now the employers are paying less wages. Still it may happen that there is a wage gap between north and south, so the migration is continuing from south to north.

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