economic of labour & socio-labour relations demos of the discipline © filippova i.h. vladimir...

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

ECONOMIC OF LABOUR & SOCIO-LABOUR RELATIONS

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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

10758061

7288900

7202340

6955738

6900547

6684842

5522408

5436012

42788029

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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11859236

11360823

11034681

8344726

6525145

5384875

4678730

4666172

4275612

4261786

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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11635995

3684217

3647234

3299268

2733109

2648315

2226706

2224503

2185919

1736314

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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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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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


SENDING SENDING

COUNTRIESCOUNTRIES

Demographic Demographic

impactsimpacts


impactsimpacts

Impacts of return Impacts of return

migrationmigration

Impacts of return Impacts of return

migrationmigration

Social and cultural Social and cultural

impactsimpacts


impactsimpacts


impactsimpacts


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


impactsimpacts


impactsimpacts


RECEIVING RECEIVING

COUNTRIESCOUNTRIES


RECEIVING RECEIVING

COUNTRIESCOUNTRIES


impactsimpacts


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


MIGRANTS MIGRANTS

AND THEIR AND THEIR

FAMILIESFAMILIES


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


impactsimpacts


impactsimpacts

economic of labour & socio-labour relations demos of the discipline © filippova i.h. vladimir...

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