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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS Demos of the discipline © Filippova I.H. Vladimir Dahl East-Ukrainian National University Emigration Immigration Labor Migration 1 main
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 2 Migration Almost 3.15% of the world population live outside their countries World Population: 6,853,328,460 Migrants in the world: 215,738,321 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 3 International migration International migration will play an increasing role in the demographic future of nations if fertility continues to decline in most countries. 40% 90% Net immigration already accounts for roughly 40% of population growth in the United States of America and about 90% in the EU-15 countries
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 4 International Labour Migration International labour migration is defined as the movement of people 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 5 Migration 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 6 Top migrant destination
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 7 Top emigration countries
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 8 Top migration corridors
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 9 Migration'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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 10 Theories 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 11 Neoclassical 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 12 Selectivity 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 13 Human 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 14 Lewis 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 15 Dual 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 sector Capitalist sector LaborLabor ProfitProfit
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 16 Opportunity 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 for the rural economy
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 17 Key hypothesis of the Lewis model W L 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 18 Gustav 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 19 Rural-to-Urban Migration WW LL Rural sectorUrban sector migration Labor drawn 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 20 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
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 21 Michael 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 is migration costs, is the probability of urban employment at time t, denotes urban earnings given employment, represents expected rural earnings at time t, is the discount rate.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 22 Share 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 23 The 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 24 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 25 World 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 26 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 theory
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 27 The 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).
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 28 The 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 29 Equilibrium model of migration WW L L If the countries are closed, there are no migration flows If the countries are closed, there are no migration flows A Country A B Country B emigrationimmigration
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 30 Migrant 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.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 31 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 Causes of migration on sending countries on receiving countries in migrants and their families Analysis of migration s Impacts of migrations
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 32 IMPACTS ON SENDING COUNTRIES Economic impacts of remittances Social costs of reproduction (human capital) Social costs of reproduction (human capital) IMPACTS ON SENDING COUNTRIES Demographic impacts Impacts of return migration Social and cultural impacts Demographic impacts Political impacts
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 33 Causes of Migration Economic asymmetries between sending and receiving countries Human development index GINI coefficient Gender inequalities Causes of migration Social inequalities between sending and receiving countries Relative economic productivity between sending and receiving countries Relative economic productivity between sending and receiving countries Differences in economic growth Wage differentials Labor precariousness in sending and receiving countries Labor precariousness in sending and receiving countries Deficit or surplus in labor force Gaps in research and development investments Gaps in research and development investments
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 34 IMPACTS ON RECEIVING COUNTRIES Economic impacts Social and cultural impacts IMPACTS ON RECEIVING COUNTRIES Demographic impacts Impacts on national security security
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 35 IMPACTS ON MIGRANTS AND THEIR FAMILIES Economic impacts IMPACTS ON MIGRANTS AND THEIR FAMILIES Impacts on human rights Impacts on labor conditions Social and cultural impacts
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS © Filippova I.H. 36 The end
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