The Welfare Effects of Unrestricted Labour Migration in a Two Nation World Economy

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The welfare effects of unrestricted labour migration in a two nation world economy. Labour migration can be defined as the movement of workers from one region, state or country to another with the intention of working at the foreign nation in exchange for wages for a considerable period of time. There are several reasons why international labour migration occurs. Some of these reasons include; greater economic development, higher wage rate opportunities, lower living costs and greater quality of life, higher standard of living, better working conditions, higher level of education, low gender equality in home country, scarcity of natural resources in home country, etc. (Wildan, 2012). A major determinant of labour migration is the barriers that exist in nations to curb immigration or emigration. The fewer labour migration barriers that exist, the greater the mobility of labour in the international market (Kjeldsen-kragh, 2002). The aim of this essay is to discuss the welfare effects of international labour migration in a two nation world economy, when no barriers to migration exist. According to Dickens, (1992), poor nations have large underemployed labour force; the rate of supply cannot keep up with the demand for jobs. Thus these nations supply labour to rich foreign nations. Rich nations are said to experience economic growth as a result of labour immigration, an example is the United States. Approximately 70million people moved to the United States between 1820 and 2004. These immigrants expanded the labour force when other factors of production such as land and capital where still budding. Thus, it is not improbable to conclude that immigration played a role in the United States emergence as the leading world economy in the 1900s. Countries have discovered the relationship between labour immigration and economic growth, thus governments have come up with policies inviting workers from foreign countries relocate to their countries for short periods of time...
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