Labour Mobiliti Dr Jakie
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Labour Mobiliti Dr Jakie

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Labour economics by Dr.jackie, USM

Labour economics by Dr.jackie, USM

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    Labour Mobiliti Dr Jakie Labour Mobiliti Dr Jakie Presentation Transcript

    • LABOUR MOBILITY
    • Types of labour mobility
      • Change of employer/firm
      • Change of occupation
      • Change of geographical location*
    • Question
      • What influences an individual’s decision regarding migration?
      • (Migration: an investment in human capital)
    • Costs of migration
      • Transportation expenses
      • Forgone income during the move
      • Psychic costs
      • Loss of seniority and pension benefits
      • Benefits of migration
      • Increase in the stream of future earnings
      • If expected earnings gain exceeds the combined monetary and net psychic costs, the person will migrate.
      • N N
      • V P =  E 2 -E 1 -  C - Z
      • n=1 (1+i) n n=1 (1+i) n
      • V P = Present value of net benefits
      • E 2 = Earnings from the new job in year n
      • E 1 = Earnings from existing job in year n
      • N = Length of time expected on new job
      • i = interest rate (discount rate)
      • n = year in which benefits and costs accrue
      • C = direct and indirect monetary costs resulting from move in the year n
      • Z = net psychic costs of the move (psychic costs minus psychic gains)
    • Question
      • What are the determinants of migration?
      • Age
      • Family factors
      • Education
      • Distance
      • Unemployment rate
      • Other factors
        • Home ownership
        • Government policies (personal tax rates, government spending on services, investment policies, etc.)
        • Language
        • Immigration quotas and emigration prohibitions
        • Political factors
        • Union membership
        • Quality of life (climate, crime rate etc.)
    • Wage Narrowing and Efficiency Gains
      • Assumptions:
      • Two labour markets, each perfectly competitive and each situated in a different geographical location
      • Each labour market contains a fixed number of worker and there is no unemployment in either market.
      • Non-wage job amenities and locational attributes are the same in both areas
      • Capital is immobile
      • Workers possess perfect information about wages and working conditions in both markets and migration is costless
    • Labour Market A Labour Market B (1 A) (2 A) (3 A) (1 B) (2 B) (3 B) L VMP A , Annual wage VTP A , Value of total product L VMP B Annual wage VTP B , Value of total product 1 $25000 $25000 1 $21000 $21000 2 23000 48000 2 19000 40000 3 21000 69000 3 17000 57000 4 19000 88000 4 15000 72000 5 17000 105000 5 13000 85000 6 15000 120000 6 11000 96000 7 13000 133000 7 9000 105000 8 11000 144000 8 7000 112000 9 9000 153000 9 5000 117000 10 7000 160000 10 3000 120000
      • Labour will continue to relocate until VMP A =VMP B
      • Question
      • State the direction of migration and the number of workers who migrate.
      • What is the impact of migration on the total value of output?
      • VTP before migration = $____
      • VTP after migration = $____
    • Efficiency gains from migration COUNTRY A COUNTRY B L L W a W e e f b W 0 D A a g c W e W b 0 W h i j l k m D B Before migration: output A=Oabe; After migration: output A= Oacf Before migration: output B=Ohjl After migration: output B=Ohik
    • External Effects Migration Externalities
      • Migration externalities
      • Real negative externalities: e.g. Congestion, crime
      • Pecuniary (Financial) Externalities
      • --Losses in the Origin Country
        • --Reduced Wage Income to Native Workers
        • --Fiscal impacts (government expenditure & taxes)
        • --Gains to Owners of Capital
    • COUNTRY A (destination) (before migration) L W a W e e f b W 0 D A a g c Before migration: Total output? Labour Share? Capitalists share? After migration: Total output? Labour Share? Capitalists share? W a W a W e 0 D A b g c e f L COUNTRY A (destination) (after migration) g
    • Capital Flows COUNTRY A (USA) COUNTRY B (South Korea) L L S S D D 1 D D 1 W W 0 0 W A W E W E W B Initially: W A > W B Capital flows shift the labour demand curve The wage gap/differential between A and B is reduced. This reduces the extent of migration.
    • Product Flows (International Trade)
      • Capital and labour are immobile
      • Workers in both countries are homogenous
      • Assume W us <W Korea
      • US Consumers will buy more Korean goods
      • Labour demand in Korea ↑ -> W Korea ↑
      • Demand for US products decline. Labour demand in US ↓-> W us ↓
      COUNTRY A (USA) COUNTRY B (South Korea) L L S S D D 1 D D 1 W W 0 0 W A W E W E W B
    • Effects of Illegal Immigration
      • Employment Effects
      • Do illegal immigrants decrease the employment of domestic workers on a one-for-one basis?
      • Wage effects (substitutes or complements)
      • Fiscal effects (taxes, government expenditure)
      S d S t D L =MRP W L 0 Q d Q t W d W t