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Transcript of ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS Demos of the discipline © Filippova I.H. Vladimir Dahl...
ECONOMIC OF LABOUR ECONOMIC OF LABOUR
& SOCIO-LABOUR & SOCIO-LABOUR
RELATIONSRELATIONS
ECONOMIC OF LABOUR ECONOMIC OF LABOUR
& SOCIO-LABOUR & SOCIO-LABOUR
RELATIONSRELATIONS
Demos of the disciplineDemos of the discipline
© Filippova I.H.© Filippova I.H.
Vladimir Dahl East-Ukrainian National University
EmigrationEmigration
ImmigrationImmigration
Labor MigrationLabor Migration
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MigrationMigration
Almost 3.15% of the world population live outside their countries
World Population:World Population:
6,853,328,4606,853,328,460
Migrants in the world:Migrants in the world:
215,738,321215,738,321
According to the International
Organization for Migration's World
Migration Report 2010, the number of
international migrants was estimated at
214 million in 2010. If this number
continues to grow at the same pace as
during the last 20 years, it could reach
405 million by 2050.
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International migrationInternational migration
International migration will play an increasing role in the demographic future of
nations if fertility continues to decline in most countries.
Net immigration already accounts for roughly 40%40% of population growth in the
United States of America and about 90%90% in the EU-15 countries
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International Labour MigrationInternational Labour Migration
International labour migration is defined as the movement of people International labour migration is defined as the movement of people
from one country to another for the purpose of employment.from one country to another for the purpose of employment.
Labour mobility has
become a key feature of
globalization and the
global economy with
migrant workers earning
US$ 440 billion in 2011,
and the World Bank
estimating that more
than $350 billion of that
total was transferred to
developing countries in
the form of remittances.
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Migration from UkraineMigration from Ukraine
Recently, Ukraine has become
one of the major labor exporting
countries in Europe. Rough
estimations of the workforce that
has at some time worked abroad
about 7 million people, which is a
lot in any case for Ukraine with
its work-capable population of
about 28 million.
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Top migrant destinationTop migrant destination
12270388
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0 7000000 14000000 21000000 28000000 35000000 42000000 49000000
USA
RUSSIAN FED
GERMANY
SAUDI ARABIA
CANADA
UNITED KINGDOM
SPAIN
FRANCE
AUSTRALIA
INDIATop migrant Top migrant
destinationdestination
Top migrant Top migrant
destinationdestination
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0 2000000 4000000 6000000 8000000 10000000 12000000 14000000
MEXICO
INDIA
RUSSIAN FED
CHINA
UKRAINE
BANGLADESH
PAKISTAN
UNITED KINGDOM
PHILIPPINES
TURKEY
Top emigration countriesTop emigration countries
Top emigration Top emigration
countriescountries
Top emigration Top emigration
countriescountries
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0 2000000 4000000 6000000 8000000 10000000 12000000 14000000
•MEXICO-USA
•RUSSIAN FED.-UKRAINE
•UKRAINE-RUSSIAN FED.
•BANGLADESH-INDIA
•TURKEY-GERMANY
•KAZAKHSTAN-RUSSIANFED.
•RUSSIAN FED.-KAZAKHSTAN
•CHINA-HONG KONG
•INDIA-UNITED ARABEMIRATES
•CHINA-USA
Top migration corridors Top migration corridors
Top migration Top migration
corridorscorridors
Top migration Top migration
corridorscorridors
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Migration's costs & risksMigration's costs & risks
In countries, which do not share a long
and porous border with the destination
country and do not have extensive
networks leading to low-skilled jobs
there, international migration is more
costly and risky.
This precludes much emigration from
the low end of the skill distribution,
leaving a predominance of brain-drain
migrants at the top.
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Theories of migrationTheories of migration
Theories of migration try to
explain what drives
population flows.
Given the complex nature of
the decision process
individuals face, there is a
large variety of theoretical
models available to explain
the actual migration outcome.
These models may either be
classifed as micro- or
macroeconomic in nature.
While micro behavioural models focus on
dominant factors at the individual level (such as
the human capital model), macroeconomic models
especially focus on the labour market dimension of
migratory flows.
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Neoclassical migration theoryNeoclassical migration theory
The human capital model of migration in
fact views the process of migration as an
investment where the returns to migration
(in terms of higher wages associated with a
new job) exceed the costs involved in
moving.
From this follows that the humans compare
the expected income they would obtain for
the case they stay in their home region (X)
with the expected income they would
obtain in the alternative region (Y) and
further accounts for 'transportation costs' of
moving from region X to Y.
The neoclassical migration theory starts
from an expected income (utility)
maximization approach.
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Selectivity of migrationSelectivity of migration
Thus, neoclassical economic theories of labor migration posit that individuals situate
themselves in the labor market and jobs where their expected earnings (net of migration
costs) are highest. Earnings are the product of wages and time worked, both of which
depend on education and other “human capital” characteristics of individuals. Other
considerations affecting individuals’ satisfaction or “utility” at different locales (e.g.,
proximity to family members, relative deprivation, family income risk) also affect migration
propensities in neoclassical models.
The association between
characteristics of individuals and
their likelihood of migrating is
frequently referred to as the
“selectivity” of migration.
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Human capital as the factor of migrationHuman capital as the factor of migration
Social science research on the
determinants of migration using household
level data generally find that human capital
(e.g., education) is positively related to the
likelihood of out-migration.
The selectivity of migration on individual and
household characteristics varies across
migrant destinations. It depends critically on
the returns to these characteristics in
different migrant labor markets.
For example, in most cases, average
schooling levels for immigrants in the
U.S. are substantially above those of
their countries of origin. This finding
reflects higher economic returns to
schooling in the U.S. compared to
places of origin as well as other
potential migrant destinations (e.g.,
urban areas in migrants’ countries of
origin).
It also has implications for development.
If migrants take (human) capital with
them when they migrate, this may have
detrimental effects on the productivity of
workers left behind.
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Lewis dual economyLewis dual economy
Though neoclassical two-sector models originally designed to
examine the reallocation of labor between rural and urban areas, it is
potentially applicable to international migration.
Sir W. Arthur Lewis
The Lewis dual economy consists of a "capitalist" sector and a
"non-capitalist" sector.
Although Lewis did not intend this, in practice the capitalist sector
has generally become identified with the urban economy and the
non-capitalist sector with agriculture or the rural economy.
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Dual economyDual economy
The capitalist sector hires labor and sells
output for a profit, while the non-capitalist
(or subsistence) sector does not use
reproducible capital and does not hire labor
for a profit.
Initially, labor is concentrated in the non-
capitalist sector. As the capitalist sector
expands, it draws labor from the non-
capitalist sector.
If the capitalist economy is concentrated in
the urban economy, labor transfer implies
geographic movement, i.e., rural-to-urban
migration.
Subsistence Subsistence
sectorsector
Subsistence Subsistence
sectorsector
Capitalist Capitalist
sectorsector
Capitalist Capitalist
sectorsector
LaborLaborLaborLabor
ProfitProfitProfitProfit
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Opportunity cost for the rural economyOpportunity cost for the rural economy
In theory, migration implies an opportunity
cost for the rural economy, which loses the
product of the individuals who migrate.
However, the centerpiece of the Lewis
model (and essence of the classical
approach) is the assumption that labor is
available to the industrial sector in unlimited
quantities at a fixed real wage, measured in
agricultural goods. In the limiting case, this implies that there
is surplus or redundant labor in rural
areas, such that the marginal product of
rural labor is zero, and labor thus may be
withdrawn from rural areas and employed
in the urban sector without sacrificing any
loss in agricultural output. That is, the
opportunity cost or "shadow price" of rural
labor to fill urban jobs is zero.
Opportunity cost Opportunity cost for the rural for the rural economyeconomy
Opportunity cost Opportunity cost for the rural for the rural economyeconomy
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Key hypothesis of the Lewis modelKey hypothesis of the Lewis model
DL
W
L
SL
In the Lewis model, earnings at the
prevailing capitalist-sector wage must
exceed the non-capitalist-sector
earnings of individuals willing to
migrate.
Any tendency for earnings per head to
rise in the non-capitalist sector must be
offset by increases in the labor force
there (e.g., through population growth,
female labor-force participation, or
immigration).
A key hypothesis of the Lewis model is
that rural out-migration is not
accompanied by a decrease in
agricultural production nor by a rise in
either rural or urban wages.
More generally, the labour supply from
the subsistence sector is unlimited if the
labour supply is infinitely elastic at the
ruling capitalist-sector wage.
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Gustav Ranis & John FeiGustav Ranis & John Fei
According to Ranis and Fei’s interpretation of the Lewis
model, the perfectly elastic labor supply to the capitalist
sector ends once the redundant labor in the rural sector
disappears and a relative shortage of agricultural goods
emerges.
Through migration, the marginal value products of labor
are equated between the two sectors. Here the Lewis
classical approach ends and the neoclassical analysis
starts. The dual economies merge into a single economy
in which wages are equalized across space.
Assuming full employment of labor in both rural and urban sectors and minimal transactions
costs, inter-sectoral wage differentials should be the primary factors driving rural out-
migration.
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Rural-to-Urban MigrationRural-to-Urban Migration
Rural-to-Urban MigrationRural-to-Urban MigrationRural-to-Urban MigrationRural-to-Urban Migration
W W
L LRL0
RW0
SL
DLUW0
Rural sector Urban sector
UL0
DL
SL
RL1
RW1
migration
UL1
UW1 Labor drawn
RW2
Rural-to-urban migration exerts upward pressure on wages and on the marginal value
product of labor in rural areas, while putting downward pressure on urban wages.
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Michael P. Todaro Michael P. Todaro
Internal and international migration are
modeled according to this perfect-markets
neoclassical specification in virtually all
computable general equilibrium models, both
national and international.
In contrast, most microeconomic models of
rural out-migration are grounded on Todaro's
seminal work, which incorporates labor-
market imperfections, including urban
unemployment, into a migration model.
Michael P. Todaro
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Michael P. TodaroMichael P. Todaro
Todaro proposed a modification of the neoclassical migration model in which each
potential rural-to-urban migrant decides whether or not to move to the city based on an
expected income maximization objective.
Expected urban income at a given locale is the product of the wage (the sole determinant
of migration in the neoclassical models), and the probability that a prospective migrant will
succeed in obtaining an urban job. Expected rural income is calculated analogously.
Individuals are assumed to migrate if their discounted future stream of urban-rural
expected income differentials exceeds migration costs; i.e., if
0)()(0
cdttyytpe ruu
Tt
is migration costs,
)(tpu is the probability of urban employment at time t,
uy denotes urban earnings given employment,
)(tyr represents expected rural earnings at time t,
c
is the discount rate.
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Share of rural population & GNP pcShare of rural population & GNP pc
Among nations, the share of rural population declines sharply as per-capita incomes
increase, from 70 to 80% in countries with the lowest per-capita GNPs to less than 15%
in the highest-income countries.
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The share of the national workforce in agricultureThe share of the national workforce in agriculture
The share of the national workforce in agriculture plunges even more sharply, from 90%
or higher in low-income countries to less than 10 % in high-income countries.
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Foreign seasonal agricultural service workforce Foreign seasonal agricultural service workforce
In the United States an estimated 69 % of the 1996 seasonal
agricultural service workforce was foreign-born, and in
California, the nation's largest agricultural producer, more
than 90 % of the seasonal agricultural service workforce was
foreign-born.
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World migrations out of rural areasWorld migrations out of rural areas
The world's great migrations out of rural areas are accelerating. The most populous
countries also are among the most rural. The greatest migration potential is in China,
where 71 % of the population is rural and an estimated one-third of the rural labor force
of 450 million is either unemployed or underemployed.
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Human Capital Theory and Migration Human Capital Theory and Migration
Human capital models
of migration represent
an effort to provide the
migration theories
presented above with a
micro grounding,
permitting tests of a far
richer set of migration
determinants and
impacts.
The predictions of Human capital migration theoryThe predictions of Human capital migration theory
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The predictions of Human capital migration theoryThe predictions of Human capital migration theory
The predictions of Human capital migration theoryThe predictions of Human capital migration theory
First, the young should be more mobile
than the old, inasmuch as they stand to
get returns from migration over a longer
period of time.
Second, migration between locales should be negatively related
to migration costs. This has been interpreted as implying a
negative association between migration flows and distance.
However, considerations besides distance (especially access to
information) may make distance less of a deterrent for some
individuals (e.g., better-educated individuals or those with
"migration networks", contacts with family or friends at prospective
migrant destinations).
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The predictions of Human capital migration theoryThe predictions of Human capital migration theory
The predictions of Human capital migration theoryThe predictions of Human capital migration theory
Third, neutral productivity growth in an economy - e.g.,
equal rates of growth in the rural and urban sectors -
will increase migration from low-income (e.g., rural) to
high-income (e.g., urban) sectors or areas.
Fourth, specific human capital variables that yield a higher
return in region A than in region B should be positively
associated with migration from B to A.
In addition to these predictions, human capital theory
implies that income differentials between rural and urban
areas are eliminated by migration over time.
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Equilibrium model of migrationEquilibrium model of migration
Labor MigrationLabor MigrationLabor MigrationLabor Migration
W W
L LAL0
AW0
SL
DLBW0
If the countries are closed, If the countries are closed, there are no migration flowsthere are no migration flowsIf the countries are closed, If the countries are closed,
there are no migration flowsthere are no migration flows
Country AA Country BB
BL0
DL
SL
DL1SL1
AW1
emigration
DL1BL1
BW1
immigration
AW1
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Migrant remittancesMigrant remittances
Measuring remittances is difficult
because migrants often enter developed
countries outside of official channels and
repatriate their earnings through informal
means. Money may be returned in the
form of goods purchased abroad or in
the form of cash savings brought back by
migrants or visiting family members
("pocket transfers").
Migration not only produces lost-labor, and possibly also lost-capital, effects on rural
economies. It also represents a potentially important source of income and savings,
through migrant remittances. Non-migrants benefit from emigration, even if they do not
receive any of the remittances themselves, provided that the magnitude of migrants'
remittances exceeds a critical threshold roughly equal to the value of the production they
would have produced had they stayed behind.
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The Modern Approach to analysis of Migration The Modern Approach to analysis of Migration
TOWARDS AN ASSESSMENT OF MIGRATION, DEVELOPMENT AND HUMAN RIGHTS LINKS:
CONCEPTUAL FRAMEWORK AND NEW STRATEGIC INDICATORS
http://www.un.org/esa/population/meetings/ninthcoord2011/assessmentofmigration.pdf
CCauses of auses of
migrationmigration
CCauses of auses of
migrationmigration
on sending countrieson sending countrieson sending countrieson sending countries
on receiving on receiving
countriescountries
on receiving on receiving
countriescountries
in migrants and their in migrants and their
familiesfamilies
in migrants and their in migrants and their
familiesfamilies
Analysis Analysis
of of
migrationmigration
ss
Analysis Analysis
of of
migrationmigration
ss
Impacts of Impacts of
migrationsmigrations
Impacts of Impacts of
migrationsmigrations
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IMPACTS ON SENDING COUNTRIESIMPACTS ON SENDING COUNTRIES
Economic impacts Economic impacts
of remittancesof remittances
Economic impacts Economic impacts
of remittancesof remittances
Social costs of Social costs of
reproduction reproduction
(human capital)(human capital)
Social costs of Social costs of
reproduction reproduction
(human capital)(human capital)
IMPACTS ON IMPACTS ON
SENDING SENDING
COUNTRIESCOUNTRIES
IMPACTS ON IMPACTS ON
SENDING SENDING
COUNTRIESCOUNTRIES
Demographic Demographic
impactsimpacts
Demographic Demographic
impactsimpacts
Impacts of return Impacts of return
migrationmigration
Impacts of return Impacts of return
migrationmigration
Social and cultural Social and cultural
impactsimpacts
Social and cultural Social and cultural
impactsimpacts
Demographic Demographic
impactsimpacts
Demographic Demographic
impactsimpacts
Political impactsPolitical impactsPolitical impactsPolitical impacts
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Causes of Migration Causes of Migration
Economic asymmetries Economic asymmetries
between sending and between sending and
receiving countriesreceiving countries
Economic asymmetries Economic asymmetries
between sending and between sending and
receiving countriesreceiving countries
Human development indexHuman development indexHuman development indexHuman development index
GINI coefficientGINI coefficientGINI coefficientGINI coefficient
Gender inequalitiesGender inequalities Gender inequalitiesGender inequalities
Causes of Causes of
migrationmigration
Causes of Causes of
migrationmigration
Social inequalities between Social inequalities between
sending and receiving sending and receiving
countriescountries
Social inequalities between Social inequalities between
sending and receiving sending and receiving
countriescountries
Relative economic productivityRelative economic productivity
between sending and receiving between sending and receiving
countriescountries
Relative economic productivityRelative economic productivity
between sending and receiving between sending and receiving
countriescountries
Differences in economic growthDifferences in economic growthDifferences in economic growthDifferences in economic growth
Wage differentialsWage differentialsWage differentialsWage differentials
Labor precariousness in Labor precariousness in
sending sending
and receiving countriesand receiving countries
Labor precariousness in Labor precariousness in
sending sending
and receiving countriesand receiving countries
Deficit or surplus in labor forceDeficit or surplus in labor forceDeficit or surplus in labor forceDeficit or surplus in labor force
Gaps in research and Gaps in research and
development investmentsdevelopment investments
Gaps in research and Gaps in research and
development investmentsdevelopment investments
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IMPACTS ON RECEIVING COUNTRIESIMPACTS ON RECEIVING COUNTRIES
Economic impactsEconomic impactsEconomic impactsEconomic impacts
Social and cultural Social and cultural
impactsimpacts
Social and cultural Social and cultural
impactsimpacts
IMPACTS ON IMPACTS ON
RECEIVING RECEIVING
COUNTRIESCOUNTRIES
IMPACTS ON IMPACTS ON
RECEIVING RECEIVING
COUNTRIESCOUNTRIES
Demographic Demographic
impactsimpacts
Demographic Demographic
impactsimpacts
Impacts on national Impacts on national
securitysecurity
Impacts on national Impacts on national
securitysecurity
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IMPACTS ON MIGRANTS AND THEIR FAMILIESIMPACTS ON MIGRANTS AND THEIR FAMILIES
Economic Economic
impactsimpacts
Economic Economic
impactsimpacts
IMPACTS ON IMPACTS ON
MIGRANTS MIGRANTS
AND THEIR AND THEIR
FAMILIESFAMILIES
IMPACTS ON IMPACTS ON
MIGRANTS MIGRANTS
AND THEIR AND THEIR
FAMILIESFAMILIES
Impacts on Impacts on
human rightshuman rights
Impacts on Impacts on
human rightshuman rights
Impacts on labor Impacts on labor
conditionsconditions
Impacts on labor Impacts on labor
conditionsconditions
Social and cultural Social and cultural
impactsimpacts
Social and cultural Social and cultural
impactsimpacts
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The endThe end
THE ENDTHE ENDTHE ENDTHE END