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Chelsea Smith

Macroeconomics
Assignment 1
12 October 2015
Assignment 1
1. How have recent improvements in maternity care in mainland China likely
affected the incentives to become a tourist mother in Hong Kong?
According to the text, the quality of care in hospitals is much better in
Hong Kong. To mothers, an improvement in the quality of care in the
hospitals in Hong Kong is an incentive to want to become a tourist mother
there, because the mother knows she will be better off in a hospital in Hong
Kong. The tourist mothers are traveling to Mothers traveling to Hong Kong
in order to receive better quality health care are experiencing enlightened
self interest, which the text defines as when an individual, in the pursuit of
what makes them better off, also achieves the betterment of others around
them. By becoming a tourist mother in a hospital in Hong Kong, the mother
is seeking better health care for herself, and thereby also providing better
quality healthcare to her unborn child.
In addition, I also believe that the increase of mothers wanting to
become a tourist mother and give birth in Hong Kong follows the idea of
the rationality assumption. According to the text, the rationality assumption
is the assumption that people do not intentionally make decisions that would
leave them worse off. In my opinion, it is in the nature of a mother to make
decisions that would benefit the health of both herself and her child, which is
a representation of the rationality assumption. There are many additional
incentives for expectant mothers to become tourist mothers in Hong Kong,
as opposed to giving birth on the mainland. These incentives include, twelve
years of public education for their child, and very little health care expenses.
Tourist mothers are driven to give birth in Hong Kong by both self-interest,
and in order to secure a better future for their child.

2. How are Hong Kongs incentives to allow tourist births affected by the
fact that the city pays benefits to older residents from taxes paid by younger
residents?
Though there are many incentives for mothers to want to travel to
Hong Kong to have their children, there are also incentives for Hong Kong to
want to allow women to come to their country in order to give birth.
According to the text, nearly all of the tourist mothers who travel to Hong
Kong to give birth, usually plan to remain there long term. Many tourist
mothers traveling to Hong Kong are younger women and families consisting
of younger people. Once the mothers, or new parents become residents of
Hong Kong, they will begin contributing to the taxes, which in turn pay
benefits to older residents of Hong Kong. In addition, their children will grow
up, pay taxes, and start their own families who will continue this tradition.
In addition, the book also mentions that the birth rate in Hong Kong
has steadily been declining since the 1990s. This is another reason I think
government officials in Hong Kong allow women to travel to their hospitals to
give birth, the decrease in birth rate in the country makes the government
officials in Hong Kong more receptive to immigrants. If they did not allow
mothers to come to their country to have babies, the countrys population
would drop dramatically, which would adversely impact their economy. By
allowing young mothers to immigrate to Hong Kong to have their children,
the population of young people increases dramatically, this boosts the
economy and allows benefits to be paid to the older residents.