Suppose that Rosa is considering migration to another country. To move, she will have to spend $5,000 on transportation and $4,000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa will decide to migrate as long as the implicit costs of leaving her friends and family and adjusting to a new culture are

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The implicit costs of migration are the difference between the present value of Rosa's future earnings in her home country and the present value of her future earnings in another country, minus the explicit costs of migration. The present value of Rosa's future earnings in her home country is $500,000. The present value of her future earnings in another country is $800,000. The explicit costs of migration are $5,000 + $4,000 = $9,000. Therefore, the implicit costs of migration are $800,000 - $500,000 - $9,000 = $291,000.

Suppose That Rosa Is Considering Migration to Another Country