Download Labour Economics and Socio

Vladimir Dahl East-Ukrainian National University
© Filippova I.H.
Demos of the discipline
ECONOMIC OF LABOUR
& SOCIO-LABOUR
RELATIONS
Emigration
Labor Migration
Immigration
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
According
Organization
to
for
the
International
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
World Population:
6,853,328,460
Migrants in the world:
215,738,321
Almost 3.15% of the world population live outside their countries
2
Migration
405 million by 2050.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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% of population growth in the
United States of America and about 90% in the EU-15 countries
3
International migration
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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
global
and
economy
the
with
migrant workers earning
US$ 440 billion in 2011,
and
the
estimating
World
Bank
that
more
than $350 billion of that
total was transferred to
developing countries in
the form of remittances.
4
International Labour Migration
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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.
5
Migration from Ukraine
© Filippova I.H.
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
INDIA
5436012
AUSTRALIA
5522408
Top migrant
destination
FRANCE
6684842
SPAIN
6900547
UNITED KINGDOM
6955738
CANADA
7202340
SAUDI ARABIA
7288900
GERMANY
10758061
RUSSIAN FED
12270388
42788029
USA
0
6
7000000
14000000
21000000
Top migrant destination
28000000
35000000
42000000
49000000
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
TURKEY
4261786
PHILIPPINES
4275612
UNITED KINGDOM
4666172
PAKISTAN
4678730
Top emigration
countries
5384875
BANGLADESH
UKRAINE
6525145
CHINA
8344726
RUSSIAN FED
11034681
INDIA
11360823
11859236
MEXICO
0
7
2000000
4000000
6000000
Top emigration countries
8000000
10000000
12000000
14000000
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
•CHINA-USA
1736314
Top migration
•INDIA-UNITED ARAB
EMIRATES
2185919
•CHINA-HONG KONG
2224503
•RUSSIAN FED.KAZAKHSTAN
2226706
corridors
•KAZAKHSTAN-RUSSIAN
FED.
2648315
•TURKEY-GERMANY
2733109
•BANGLADESH-INDIA
3299268
•UKRAINE-RUSSIAN FED.
3647234
•RUSSIAN FED.-UKRAINE
3684217
•MEXICO-USA
11635995
0
8
2000000
4000000
6000000
Top migration corridors
8000000
10000000
12000000
14000000
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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.
9
Migration's costs & risks
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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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.
While
micro
behavioural
models
focus
on
dominant factors at the individual level (such as
These models may either be
the human capital model), macroeconomic models
classifed
especially focus on the labour market dimension of
as
micro-
macroeconomic in nature.
10
or
migratory flows.
Theories of migration
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
The neoclassical migration theory starts
from
The human capital model of migration in
expected
maximization approach.
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.
11
an
Neoclassical migration theory
income
(utility)
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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
frequently
to
referred
as
is
the
“selectivity” of migration.
12
Selectivity of migration
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
Social
science
research
the
For example, in most cases, average
determinants of migration using household
schooling levels for immigrants in the
level data generally find that human capital
U.S. are substantially above those of
(e.g., education) is positively related to the
their countries of origin. This finding
likelihood of out-migration.
reflects higher economic returns to
The selectivity of migration on individual and
schooling in the U.S. compared to
household
places of origin as well as other
characteristics
on
varies
across
migrant destinations. It depends critically on
potential
the returns to these characteristics in
urban areas in migrants’ countries of
different migrant labor markets.
origin).
migrant
destinations
(e.g.,
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.
13
Human capital as the factor of migration
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
Sir W. Arthur Lewis
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.
14
Lewis dual economy
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
The capitalist sector hires labor and sells
Profit
output for a profit, while the non-capitalist
(or subsistence) sector does not use
reproducible capital and does not hire labor
for a profit.
Capitalist
Initially, labor is concentrated in the non-
sector
capitalist sector. As the capitalist sector
expands, it draws labor from the noncapitalist sector.
Labor
If the capitalist economy is concentrated in
the urban economy, labor transfer implies
geographic movement, i.e., rural-to-urban
migration.
15
Dual economy
Subsistence
sector
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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
In theory, migration implies an opportunity
Opportunity cost
for the rural
economy
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
In the limiting case, this implies that there
quantities at a fixed real wage, measured in
is surplus or redundant labor in rural
agricultural goods.
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.
16
Opportunity cost for the rural economy
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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
More generally, the labour supply from
In the Lewis model, earnings at the
the subsistence sector is unlimited if the
prevailing capitalist-sector wage must
exceed
the
labour supply is infinitely elastic at the
non-capitalist-sector
ruling capitalist-sector wage.
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
W
LD
there (e.g., through population growth,
female
labor-force
participation,
or
LS
immigration).
A key hypothesis of the Lewis model is
that
rural
accompanied
out-migration
by
a
is
decrease
not
in
agricultural production nor by a rise in
either rural or urban wages.
17
Key hypothesis of the Lewis model
L
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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 outmigration.
18
Gustav Ranis & John Fei
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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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.
W
W
LD
W1
U
0
W
R
S
LS
LD
L
migration
W2R
W1U
Labor drawn
W0R
R
1
L
R
0
L
L
U
0
L
Rural-to-Urban Migration
Rural sector
19
Rural-to-Urban Migration
U
1
L
Urban sector
L
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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 labormarket
imperfections,
including
urban
unemployment, into a migration model.
Michael P. Todaro
20
Michael P. Todaro
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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
T
   e t   pu (t )  yu  yr (t )dt  c  0
0
pu (t )
is the probability of urban employment at time t,
yu
denotes urban earnings given employment,
yr (t )
represents expected rural earnings at time t,
21
Michael P. Todaro
c
is migration costs,

is the discount rate.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
22
Share of rural population & GNP pc
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
23
The share of the national workforce in agriculture
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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.
24
Foreign seasonal agricultural service workforce
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
25
World migrations out of rural areas
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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
26
Human Capital Theory and Migration
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
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).
27
The predictions of Human capital migration theory
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
28
The predictions of Human capital migration theory
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
Labor Migration
W
If the countries are closed,
there are no migration flows
W
LS
LD
D
L
W1
LS
emigration
immigration
B
0
W
A
W1 A
W0A
W1B
S
1
L
A
0
L
D
1
L
L
Country A
29
B
0
L
Country B
Equilibrium model of migration
B
1
D
1
L L
L
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
© Filippova I.H.
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.
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").
30
Migrant remittances
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
Causes of
Impacts of
migration
migrations
on sending countries
Analysis
on receiving countries
of
migration
in migrants and their
s
families
TOWARDS AN ASSESSMENT OF MIGRATION, DEVELOPMENT AND HUMAN RIGHTS LINKS:
CONCEPTUAL
FRAMEWORK
AND
NEW
STRATEGIC
http://www.un.org/esa/population/meetings/ninthcoord2011/assessmentofmigration.pdf
31
The Modern Approach to analysis of Migration
INDICATORS
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ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
IMPACTS ON
Economic impacts
of remittances
SENDING
Impacts of return
migration
COUNTRIES
Social costs of
Demographic
reproduction
impacts
(human capital)
Demographic
Social and cultural
impacts
impacts
Political impacts
32
IMPACTS ON SENDING COUNTRIES
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
Economic asymmetries
between sending and
Causes of
migration
receiving countries
Relative economic productivity
Social inequalities between
sending and receiving
countries
Human development index
between sending and receiving
countries
GINI coefficient
Differences in economic growth
Wage differentials
Labor precariousness in sending
and receiving countries
Deficit or surplus in labor force
Gaps in research and
development investments
33
Causes of Migration
Gender inequalities
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
IMPACTS ON
Economic impacts
RECEIVING
Impacts on national
security
COUNTRIES
Demographic
Social and cultural
impacts
impacts
34
IMPACTS ON RECEIVING COUNTRIES
© Filippova I.H.
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
IMPACTS ON
Economic
MIGRANTS
Impacts on labor
impacts
AND THEIR
conditions
FAMILIES
Impacts on
Social and cultural
human rights
impacts
35
IMPACTS ON MIGRANTS AND THEIR FAMILIES
ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS
THE END
36
The end
© Filippova I.H.