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  1. Inter-industry trade and Intra-industry trade
  1. Internal economies of scale and external economies of scale
  1. Monopolistic competition and Oligopoly markets
  1. Dumping
  1. International labour mobility and its effects on countries
  1. Tariffs and Import duties – effects on industries and the economies, costs and benefits of a tariff
  1. Trade policy- comment on Australia’s trade policy (both positive and negative impacts on Australian economy,  industries and employment)
  1. Import substitution and Export oriented approach (Compare any other developed nation with Australia)
  1. Controversies in trade policy- winners and losers in trade and Australia free trade agreements with Korea, Japan or China.

If you choose a topic on Trade Policy, for example, you will need to do research on this topic and write a report which will analyse how trade policies are affecting the countries and companies in their pursuit of market expansion or market share or profitability. You need to elaborate on both sides of the arguments as which countries/industries and winning and which countries/industries are losing or have not enjoyed the benefits of particular trade policy of a country or group of countries.

Theoretical Background of International Labor Flow

The process of globalization has intensified trade and global competition. The spread of international trade not only allows movement of goods but also movement of factor of production as well. The cross border movement of labor and technology has improved the way of production and global output. Efficient use of resources by countries help to enhance economic growth and national welfare. International migration has now become a prominent features of global world. Movement of international labor though attracts a great attention in the recent era of globalization, labor movement however lagged behind those of movement of capital and commodities (Bearce and Hart 2017). There are different factors that propel labor movement across countries. These factors explain the context, scale and specific characteristics of immigrant flow on which immigrants of receiving nations react.

The primary push factors for migration flow is the population explosion mostly occurring in the less developed nations. Along with this, another push factors for labor immigration is that rapid urbanization. Since the beginning of twenty first century more than half of the word population tend to live in urban areas (Arango 2017). More than 83 percent population growth is projected to occur in city areas. The paper briefly discusses growing incidence of international labor mobility with both its impacts on sending and receiving nations.

Theoretical context 

Different researchers study the theoretical background of international labor flow particularly movement of labor from poor to wealthy nations. Studies tried to investigate influence of migration flows on the receiving nations.

One better way to understand the impact of immigration to consider a theoretical mode of labor market. The economic model depicted in figure 1 explains the labor market condition with immigrant flow. Thee mode is based on several assumptions. The assumptions include wages in the market are set following mechanism of competitive market (Cadena and Kovak, 2016). Labor is assumed to be homogenous implies all the workers are identical to the employers and hence are perfect substitutes to each other. Changes in the labor market thus have no effect on others.

The downward sloping curve D represents demand curve in the labor market. The corresponding supply curve is S. Equilibrium employment in the market Q0 and equilibrium wage is W0. The flow of immigration increases supply in the market shifting the labor supply cure to S1. The results in a fall in competitive wage of native workers to W1. Consequently, there is a decline in native employment from Q0 to Q2.  Wages in the native country thus falls by (W0 – W1) whereas employment fall by (Q2 – Q0).  The impact of immigration on native workers thus has a negative impact on native workers (Alarcon 2017).

Impact of Immigration on the Labor Market for Receiving Countries

The influence of migrant arrival on the receiving nation depends on several circumstances. In nations, where wage is comparatively flexible such as in the United State, there are evidences that additional labor supply depressed workers’ wage in the same education level. With flexible wages the impact of immigrants expressed in terms of higher unemployment. In both the cases, impact of such immigration likely to be comparatively small. The productivity and employability of the migrant workers depend on matching of skill profiles of newly entered workers with the available jobs (Artuc, Lederman and Porto 2015). Countries such as Canada and Australia have adopted a scheme that would match the acceptable immigrants to the jobs. In case, where a priori job offers are required for entering in a nation as applicable for some categories of migrants in United States, employers’ demand more closely matched to the supply migrants’ supply. A significant portion of demand for migrants’ workers are driven by the associated demand by employers. With the objective of restricting undocumented migrants, employers are often penalized for hiring migrants those are irregular. In few societies, such penalties are imposed by political groups. Employers’ demand however hardly absorbs all the migration influx in the developing nations (Franzoni, Scellato and Stephan 2015). Arrangement of asylums for the immigrants inflicts great cost to the low income countries. It then becomes a high priority to support the livelihood of the migrants.

There is thus a mixed impacts of migration flow on the receiving nations. In most of the situation, impact migration on income of the native workers is comparatively small. With passes of time, there are several other factors that come into play. Firstly, industries in the host nations started to adapt skills of the new entrants in the labor force (Cadena and Kovak 2016). For example, there were some labor intensive technologies that did not exists earlier in the EU nation and also in the United States, because of non-access to the migrant workers. With flow of migrants’ workers, these nations are able to adapt labor intensive production technology to support this production.

Secondly, migration also impacts fiscal balance of the host nations. The contribution of migrants to the fiscal balance depends on whether they get jobs in the entering nation, payment of taxation, eligibility for state support. In some nations with a low or negative growth of population consider migration as a way to resolve their dynamic problem of ageing population. Net migrants with high skills are contributors of fiscal coffers (Madina and Mansurova 2016). In these states, working age migrants are only temporarily dependent on states instead of being dependent on the state to support during their old age.

Factors that Propel Labor Movement Across Countries

Another impact of immigration is analyzed with the role played by migrants in accelerating the technological progress in an economy. The census published in 2006 by National Science Foundation estimated that above 35 percent of engineers and Ph.D. scholars in the United States were foreign born. No clear estimation has yet been received regarding contribution of migrants in the technological progress of the nation (Jensen, Quinn and Weymouth 2017). Overall impact of migrants on net income of the hos nations has found to be relatively small in most of the instances. The dynamic effects of migration though might be larger. Some groups in the host countries gain while others lose. The distributional impact generated from immigrants’ flow might be significant compared to the net impacts. Native labor force who are in direct competition with migrants’ workers hurt the most. Employers on the other hand benefitted from availability of larger pool of workers. There is a mixed distributional effect on host nations.  The gain to the professional workers from arrival of migrants with less skilled workers subject to the benefit to the professional activity (Peri 2016). The gain to employers also depend on whether middle class employers are benefitted from a lower hiring cost of labors. Benefits to the professional workers can also be identified in terms of lower price for the low skilled service (Bodvarsson, Simpson and Sparber 2015).

Theoretical context 

The economic impacts of emigration imply consequences of the migration on the labor force who left behind the nations from where the workers deport. Economic effect of emigrants is opposite to that in the native destination countries. Migration of workers from one nation t others reduces wage of native workers in the destination countries. The impact is revered in the home country. Following a shortage of workers in the home country, wage in the domestic labor market increases. Owners of capital have to pay a higher wage to the workers’ lefts in the home country. It was found that immigration of workers from Mexico to United States from 1970 to 2000 increased workers having high school education who left in the Mexico by 15 percent (Yabuuchi 2015). This harmed the welfare of the Mexican owners having fixed production factors. The harm to Mexican owners exceeds the benefits to workers in terms of raising wages. The outflow of high skilled workers such as engineers and doctors is termed as brain drain.

Impact of Immigration on the Fiscal Balance of Receiving Countries

The labor force that leave the nation is the human capital for the home country and is complementary to their compatriots. Therefore, using the partial equilibrium model it can be possibly stated that citizens left in the nations are adversely affected from the emigration process.

Economic evaluation of migration on the population of hosting nation is subject to consideration of the impact of labor mobility on the citizens of origin. There is again a mixed influence. In the one end, there is an adverse influence on productivity due to brain drain. In the other end, the beneficial impact can be realized in the form of remittances send to the home countries by the emigrants’ laborers. The remittances as reported in the developing nations have grown significantly.  Next after foreign direct investment, remittances to the developing nations are the largest source of international capital inflow to the developing nations (Baruch, Altman and Tung 2016). There are several countries for which remittances even exceed the earning generated from merchandise export. These remittances provide great support in times of crisis or economic downturn in the home country. Evidences have also been found indicating situations where remittances influence labor force in the domestic country by withdrawing participation from the labor market or at least reduce work effort. In an economy having surplus of labor, it is very unlikely that emigration negatively influences others in the economy. Laborers belonging from very poor household especially in the developing nations tend to move internally rather than internationally (Borjas 2015). The corridors of international migration open a gateway for low skilled poor workers of underdeveloped and developing nations leading to a reduction in poverty in the home country through return in form of remittances.

There can be direct effect of emigration on the domestic labor market. As a large pool of worker leave the labor market, there is a possibility of higher induced wage or lower underemployment for those who left in the domestic labor market. The impact of wages on the domestic labor market is relatively small for nations characterized as a labor surplus economy. Workers remaining in the country of origin enjoy a greater opportunity through reduction in informal employment. Not all the developing countries are characterized as labor abundant countries (Artuc and McLaren 2015). For these countries, international labor mobility is followed by a significant increase in wages for existing workers.

Other effects on domestic population depends on the nature of migration that is whether it is temporary or permanent. Temporary migrants that is those whose families are left in the origin country contribute more to the remittances compared to those who settled permanently abroad. The temporary migrants also return with higher skills contributing to increased productivity in the home country latter (McNulty and De Cieri 2016).

Impact of Immigration on Technological Progress in the Receiving Economy

 

Table 1: Migration of high skilled workers

(Source: Huttunen, Moen and Salvanes 2018)

Workers with tertiary level of education are considered as high skilled laborers. As evident from the table, net migration flow of high skilled laborers increased significantly in 2000 compared to that in 1999. The number rose the highest for North America, followed by EU, Asia and Oceania and other European nations.

 

Table 2: Migration of low skilled workers

(Source: Hatton 2014)

In North America, most of the workers with low education tend to come from OECD nations. In Europe, the inflow of low skilled workers is the highest compared to other. In Total OECD, immigration of low skilled workers is higher as compared to middle and high skilled workers (Ehrenberg and Smith 2016).

Conclusion 

With pace of globalization capital and goods are moved faster across nations as compared to workers. At the global platform, labor market especially that for professional and high skilled laborers are closely integrated. For low skilled workers however, movement of laborers are mainly driven by the indirect channel for wage arbitrage as presented by trade and outsourcing. No evidences are found for migration of less skilled workers between developed and developing nations despite existing large income gaps. The demand derived from employers across the world is the main driving factor behind migration of skilled and unskilled workers. The benefit of international mobility of labor force though is quite prevalent but there are evidences of negative impact of this phenomenon. Huge flow of immigrants hurt the domestic labor market by lowering wage and aggravating unemployment problem.

Reference list

Alarcon, R., 2017. US Immigration policy and the mobility of Mexicans (1882-2005). Migraciones Internacionales, 6(20), pp.185-218.

Arango, J., 2017. Theories of international migration. In International migration in the new millennium (pp. 25-45). Routledge.

Artuc, E. and McLaren, J., 2015. Trade policy and wage inequality: A structural analysis with occupational and sectoral mobility. Journal of International Economics, 97(2), pp.278-294.

Artuc, E., Lederman, D. and Porto, G., 2015. A mapping of labor mobility costs in the developing world. Journal of International Economics, 95(1), pp.28-41.

Baruch, Y., Altman, Y. and Tung, R.L., 2016. Career mobility in a global era: Advances in managing expatriation and repatriation. The Academy of Management Annals, 10(1), pp.841-889.

Bearce, D.H. and Hart, A.F., 2017. International Labor Mobility and the Variety of Democratic Political Institutions. International Organization, 71(1), pp.65-95.

Bodvarsson, O.B., Simpson, N.B. and Sparber, C., 2015. Migration theory. In Handbook of the economics of international migration (Vol. 1, pp. 3-51). North-Holland.

Borjas, G.J., 2015. Immigration and globalization: A review essay. Journal of Economic Literature, 53(4), pp.961-74.

Cadena, B.C. and Kovak, B.K., 2016. Immigrants equilibrate local labor markets: Evidence from the Great Recession. American Economic Journal: Applied Economics, 8(1), pp.257-90.

Cadena, B.C. and Kovak, B.K., 2016. Immigrants equilibrate local labor markets: Evidence from the Great Recession. American Economic Journal: Applied Economics, 8(1), pp.257-90.

Docquier, F., Machado, J. and Sekkat, K., 2015. Efficiency gains from liberalizing labor mobility. The Scandinavian journal of economics, 117(2), pp.303-346.

Ehrenberg, R.G. and Smith, R.S., 2016. Modern labor economics: Theory and public policy. Routledge.

Franzoni, C., Scellato, G. and Stephan, P., 2015. International mobility of research scientists: Lessons from GlobSci. In Global Mobility of Research Scientists (pp. 35-65).

Hatton, T.J., 2014. The economics of international migration: A short history of the debate. Labour Economics, 30, pp.43-50.

Huttunen, K., Moen, J. and Salvanes, K.G., 2018. Job loss and regional mobility. Journal of Labor Economics, 36(2), pp.479-509.

Jensen, J.B., Quinn, D.P. and Weymouth, S., 2017. Winners and losers in international trade: The effects on US presidential voting. International Organization, 71(3), pp.423-457.

Madina, T. and Mansurova, B., 2016. Influence of the International Academic and Labor Mobility on the Activity of Open Innovations. International Journal of Environmental and Science Education, 11(15), pp.8100-8111.

McNulty, Y. and De Cieri, H., 2016. Linking global mobility and global talent management: the role of ROI. Employee Relations, 38(1), pp.8-30.

Peri, G., 2016. Immigrants, productivity, and labor markets. Journal of Economic Perspectives, 30(4), pp.3-30.

Yabuuchi, S., 2015. Globalization, International Factor Mobility, and Wage Inequality. Journal of Economic Integration, pp.577-590.

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