International Labor Mobility's Impact On Economies - An Essay.

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

Definition of International Labor Mobility

Kahanec (2013) depict that the process of exchange of capital and goods across international borders is known as international trade. Moreover, international trade also enhances the world’s economy and all the concern of the global demands and supply. However, in this process of international trade, some labor also went to other nation to work and this geographical and occupational movement of workers is known as labor mobility. In the year 2014, around 335,000 people of working age migrates to Germany; while, 218,000, 77,000, 74,000 and 59,000 workers went to UK, Switzerland, Spain and France respectively (Ec.europa.eu, 2017). It is also found from the research that the rate of labor mobility enhances in the UK, Austria, Germany and the Netherlands; however, this percentage decreases for Italy and Spain (Ec.europa.eu, 2017). Countries like Norway, Switzerland and Belgium have negligible fluctuation in labor inflow.

Image: Evolution of inflows of EU-28 citizens of working age

(Source: Ec.europa.eu, 2017)

The prime objective of this business report is to illustrate the scenario of international labor mobility and its influence on different countries.  

It is evident that labour are one of the important factor that cause high production and financial growth of an organization that on the other hand counts for increase economy for a nation (Portes & Walton, 2013). Moreover, the mobility of these labours within an economy and between different economies refers to labor mobility internationally (Bosker et al., 2012).

Docquier et al. (2015) depicts that labor mobility are of two types- geographic and occupational. However, focusing on the definition of these two kinds of labor mobility, it can be said that international labor mobility majorly emphasizes on geographical labor mobility. The research also shows that in the G20 countries, half of the world’s migrants that are 55% are present. Hnatkovska et al. (2012) furthermore describes that labor mobility does not only results in immigration of human but it also refers to movement of goods and services, production and technology across different territories. Moreover, it is also true that, irrespective of the number of staying days, an employee on emigrating from one nation to another, the factor of migration law, social security, labor law and fiscal issues have to be considered.

As per as the research findings of the European Commission, there are three types of labor mobility:

These are the workers of one state, who are not the resident of that nation went there to find work. However, these labors get the ability to register themselves as the citizen of those nations after spending a certain amount of time in that nation. Taken for instance, in most Member States of OECD provide this facility after a staying span of 3 months; while, EU-LFS only offer this provision after one year (Ec.europa.eu, 2017).

Types of Labor Mobility

In this context, the employee who are mostly emphasizes, who resides in one country but stay in other country for employment purpose (Bosker et al., 2012).  

Hnatkovska et al. (2012) highlighted that labors who went to other nation for a limited period and sent by same employer for the purpose of work.

In this context, continuance commitment of “The Three Component Model of Commitment” can be considered, where labor have perceive fear of losing their employment status (Kaiser et al. 2015). In some countries, where there is no demand of labor or recession has occurred, in such case, many employees intends to find other options through which they can continue their employment. In such cases, they become ready to work in lesser wages and other countries took this opportunity and offer them job at lesser cost.  

Foreign countries also intend to offer job to the employees of other nation if their skills and competencies matches with their organizational objectives (Lux & Sunega, 2012). In this case, expatriates see better opportunity and great facilities and the host nation sees only the way through which they can fulfill their set organization’s goals. Taken for instance, the rate of offering job to knowledgeable candidates from other nation is high as their aboriginal people started looking for job just after completing their high- schools. As a result, for higher designated jobs, there knowledge does not fit appropriately (Docquier et al., 2015). Thus, in this case also people migrated from other nation to this particular countries for the purpose of job.

Bosker et al., (2012) stated that according to the general tendency of human nature, they desire to earn more money. Taken for instance, two different companies in two different countries are associated with similar kind of job. In one country, employees are getting more wages compared to other organization. In such situations, labour of later organization intends to join the former organizations irrespective of the geographical distances. Bentolila et al. (2012) describes that in such cases, huge labour migrated to other nation and contribute their skills for getting more money in other nation.

There are several factors that is liable for international labor mobility like- enhancement in supply of labor, greater productivity and higher chances of labor unemployment (Portes & Walton, 2013). Hnatkovska et al. (2012) depicts that the general labor supply increases if more workers enter in the economy and this stabilizes the labor demand in the economy. In addition to that, Kahanec (2013) stated that another positive impact that is on a nation’s mobility is greater incorporation of knowledge and new skills through which an organization enhance their working procedures. Cadena (2014) on the other hand argues that it is not always necessary that there will be a demand for labor in the market. Thus, on more immigration in a nation, not all laborers added to the labor supply and this result in unemployment (Kahanec, 2013).

Factors driving labor mobility

The factors of extra productivity, greater nation’s income and poverty alleviation is not uniform and it totally depends on the number of residents went to other nation for work. Thus, it can be said that, the more people go to other nation, the more will be the loss of the home country as those employee contributes in the betterment of other nation.  Moreover, Docquier et al. (2015) argues that earnings of migrants is highly dependent on education level, age, gender, occupation and sector of work. Thus, if less educated people went to other nation, the impact of the home country’s profitability will be impacted negligibly. Cadena (2014) stated that return migrants have the potential to enhance the economic development of their home countries. It is also found from the research that, it is genera; tendency of human to return back to their home country and start for entrepreneurship due to accumulation of savings and human capital that on the other hand boosts the economy of their own nation (Lux & Sunega, 2012). Moreover, since consumers representing large communities, the more labor migrate in other countries, the investment flows between origin and destination countries enhances (Cadena, 2014). Thus, this result in more trade that is international and the home country can also earn much profitability.

It is found that in the United States, 47% of the increased workforce represents the international moved workers (Ec.europa.eu, 2017). The number of this statistics for Canada and Europe is 45% and 70% respectively (Ec.europa.eu, 2017).  

Image: Impact of more labor on their wages

(Source: Cadena, 2014)

In the above image, two factors are taken into consideration, “T= L” and “L= Labor”. The straight line represents that, the more is the land offered to industry expands; the demand for the labor also increases. The prime reason for this is business expansion needs more innovation that skilled people have the potential to bring (Cadena, 2014). However, in actual life, the graph does not show a liner arithmetic progressive result but it forms a diminishing slope, which on the other hand depicts that the more people it is added in the industry, the less efficient is the business outcome and in that case, the wages of the labor decreases.  

Image: Economic gain of the host country

(Source: Cadena, 2014)

In this graph, there are two variable taken into consideration- “MPL= Marginal product of Labor” and “L= Labor”. The straight vertical line represents the total number of labor applying in a host country (Cadena, 2014). Moreover, the Wages + Rent is the total output obtained by this particular economy. Thus, this can be said that the total marginal product of labor is dependent on total amount of labor migrated to other nation. However, from the graph it can be clearly illustrated that square portion represents the real wages earned by the employee and the area represented by ‘wage’ is the total financial resources or shares obtained by a nation.

Impact of labor mobility on the economy

 In emerging countries especially Asian counties, both women and men have been migrating between southern countries (Niebuhr et al., 2012). There is a huge demand of labor in developing countries due to initiatives for market development, products enhancement and infrastructure establishments. This is the reason that the male labour has a tendency to move to less developed countries more than female migrants (McCollum et al., 2013). Thus, the income distribution among these countries is unequal. Moreover, the demand of the goods and the services are also not properly analyzed not only in the emerging economy but also in G20 countries. This kind of labor mobility can be witnessed through south- south migration (Beaverstock & Hall, 2012).  From South Asia, 30 million additional people migrated outside their nation especially in southern region that resulted in 26% of south- south flow (Hnatkovska et al., 2012). Moreover, the result can further resulted through the migration of labour from India to Middle- East in the year 2014. The research shows that 52% of total Asian migrants are from India, Bangladesh, Pakistan and Afghanistan to Middle- East (Barker, 2012).

Portes and Walton (2013) depicts that since most of the skilled employees got better offer and opportunities in foreign countries, there is less number of effective human capital in home counties. One of the theories that can be fitted in this scenario is the “brain- drain” strategy (Niebuhr et al., 2012). On the other hand, it can also be said that brain drain enhances the human capital in host counties. This also results in enhancement in trading. Barker (2012) found evidences that labour mobility create and strengthen trade networks and business profitability among the migrant and home countries. In this case, not only the tangible improvements can be witnessed but also the intangible benefits like knowledge, technology and ideas can be seen from emigrant-destination countries to emigrant-origin countries (Portes & Walton, 2013).  

Lux and Sunega (2012) stated that movements of labour from poor countries to the wealthier country, results of negative environmental effects can be witnessed. It is also evident that the ecological footprint of wealthy people is much larger and thus, people who migrated to wealthier nation enrich more. According to the theory of “environmental Kuznets curve”, the relationship between environmental impact and economic development is hump shaped (Cadena, 2014). Thus, it can be said that in initial phase, when an economy grows, there is less environmental impact, but as economy grows, the number of production increases and the environment of that nation started degraded (Barker, 2012).

Labor Mobility and Entrepreneurship

Conclusion

Thus, it can be concluded that labour migration occur from history and it can be aid that the reason behind the cause of migration is unemployment in one nation, better opportunity in other territory for similar kind of job and  others. Moreover, the impact of labor mobility can be witnessed through extra productivity, greater nation’s income and poverty alleviation. Labour mobility also influences the economic contribution in host country by international migrated labor. Moreover, the impact of the concerned factor is also illustrated on emerging countries through less human capital. Lastly, environmental impact can also witness and the economy on of one’s nation is inversely proportional to it. Thus, the more migrants and the more and production is made, the more is the adverse environmental impact on the economy.  

Reference List 

Barker, V. (2012). Global mobility and penal order: Criminalizing migration, a view from Europe. Sociology Compass, 6(2), 113-121.

Beaverstock, J. V., & Hall, S. (2012). Competing for talent: global mobility, immigration and the City of London’s labour market. Cambridge Journal of Regions, Economy and Society, rss005.

Bentolila, S., Cahuc, P., Dolado, J. J., & Le Barbanchon, T. (2012). Two?tier labour markets in the Great Recession: France versus Spain. The Economic Journal, 122(562), F155-F187.

Bosker, M., Brakman, S., Garretsen, H., & Schramm, M. (2012). Relaxing Hukou: Increased labor mobility and China’s economic geography. Journal of Urban Economics, 72(2), 252-266.

Cadena, B. C. (2014). Recent immigrants as labor market arbitrageurs: Evidence from the minimum wage. Journal of urban Economics, 80, 1-12.

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

Ec.europa.eu. (2017). Ec.europa.eu. Retrieved 4 June 2017, from https://ec.europa.eu/social/BlobServlet?docId=17165&langId=en

Hnatkovska, V., Lahiri, A., & Paul, S. (2012). Castes and labor mobility. American Economic Journal: Applied Economics, 4(2), 274-307.

Kahanec, M. (2013). Labor mobility in an enlarged European Union. International handbook on the economics of migration, 137-152.

Kaiser, U., Kongsted, H. C., & Rønde, T. (2015). Does the mobility of R&D labor increase innovation?. Journal of Economic Behavior & Organization, 110, 91-105.

Lux, M., & Sunega, P. (2012). Labour mobility and housing: the impact of housing tenure and housing affordability on labour migration in the Czech Republic. Urban Studies, 49(3), 489-504.

McCollum, D., Shubin, S., Apsite, E., & Krisjane, Z. (2013). Rethinking labour migration channels: the experience of Latvia from EU accession to economic recession. Population, Space and Place, 19(6), 688-702.

Niebuhr, A., Granato, N., Haas, A., & Hamann, S. (2012). Does labour mobility reduce disparities between regional labour markets in Germany?. Regional Studies, 46(7), 841-858.

Portes, A., & Walton, J. (2013). Labor, class, and the international system. Elsevier.