Consider a family where the husband and wife work together, and each spouse has three more years to work before

Consider a family where the husband and wife work together, and each spouse has three more years to work before

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Consider a family where the husband and wife work together, and each spouse has three more years to work before
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Consider a family where the husband and wife work together, and each spouse has three more years to work before retiring (after the current year). The table below shows the estimated combined salary over the remaining years of employment if each remains at their current employer. It also shows the combined salary they can expect if they relocate and change employers.YearCombined Salary at Current JobsCombined Salary for New Jobs180,000 $83,000 $282,000 $87,000 $385,000 $92,000 $Let’s say the total moving cost, including direct expenses, foreclosed gains, and psychic costs, totals $10,000. Suppose all costs are incurred in the current year.QuestionsIf the discount rate is equal to the market rate of 6%, is this investment in mobility worth it?What could be the maximum mobility costs and still make this investment worthwhile?How reasonable is it to assume that all of the psychic costs of mobility are incurred in the current year?Is it reasonable to expect that moving has psychic benefits as well? If so, give some examples.When a person is already moving without a new job, evidence shows that mobility can lead to lower earnings from the job initially available. This reduction is then greatly exceeded in future periods by faster earnings growth at the new location. Holding everything else constant, what is the lowest value of the new combined salary in year 1 and could this still be a worthwhile investment?

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