International Labor Mobility
International labor migration is a key feature of our international economy. For example, many industries in the United States are heavily dependent on legal and illegal labor from Mexico and the Caribbean. Middle Eastern economic development has been fueled by laborers from South Asian countries, and several European countries have had formal guest-worker programs in place for years. The United Nations estimated that more than 175 million people, roughly 3 percent of the world’s population, live in a country other than where they were born.
International labor mobility is a politically contentious subject, particularly when considering the illegal movements of people across international borders to seek work. For example, a number of European countries saw the rise in the 1990s of a number of anti-immigrant political parties such as the National Front in France, the National Alliance in Italy, and the Republikaner in Germany. The subject is equally contentious among academics who have espoused numerous theories for the effects of immigration, both illegal and legal, on foreign and domestic economies. Traditional international economic theory maintains that reducing barriers to labor mobility results in the equalization of wages across countries.
This can be demonstrated easily with a graphical model. First, the wage rate in a particular country can be shown graphical by looking at the marginal product of labor (MPL). The MPL curve demonstrates the real wage rate at any given level of employment in an economy.
Now, consider a model where there are two countries: Home and Foreign. Each country is represented by a MPL curve. Initially, Home's labor force is at point C and Foreign's labor force is at point B. In the absence of labor mobility, these points would stay the same. However, when you allow labor to move between countries, assuming the costs of movement are zero, the real wage converges on point A, and workers in Home move to Foreign where they will earn a higher wage.
Read more about this topic: International Factor Movements
Famous quotes containing the words labor and/or mobility:
“As Labor is the common burthen of our race, so the effort of some to shift their share of the burthen on to the shoulders of others, is the great, durable, curse of the race.”
—Abraham Lincoln (1809–1865)
“One set of messages of the society we live in is: Consume. Grow. Do what you want. Amuse yourselves. The very working of this economic system, which has bestowed these unprecedented liberties, most cherished in the form of physical mobility and material prosperity, depends on encouraging people to defy limits.”
—Susan Sontag (b. 1933)