Can you help me out with some elaboration here? I've long had a gut sense that an international trade regime in which capital is mobile but labor is immobile works to the disadvantage of workers, but the simple models (i.e., the ones I understand!), at least, don't work that way. Perhaps it has to do with immobile labor getting stuck in economies mired in an efficiency wage trap, or some other low-level equilibrium? (Inadequate state capacity to provide essential infrastructure?) Or is it simply a reflection of the price wedge - much higher for wages than for profits? Where do you advise me to go to understand this tangle a bit better?
Michael McIntyre
>>> dmonaco at pop3.utoledo.edu 05/02/02 11:23AM >>>
At 08:17 AM 5/2/2002 -0700, you wrote:
>Contact: Karen Emerton
>karen.emerton at esrc.ac.uk
>44-1793-413122
>Economic & Social Research Council
>http://www.esrc.ac.uk/
>
>The main message of the report that the economic
>impact of labour mobility is largely positive, both in
>the home and host countries, and can improve labour
>flexibility in Europe.
>
>It counters the common view that uncontrolled
>immigration would result in reduced average incomes,
>the displacement of local workers from jobs, and an
>increased burden on welfare services.
Common markets are great for workers! With or without repatriation of income, international labor mobility equalizes wages and increases the overall gains to labor at the expense of capital. So It becomes clear why the US (and Asia) never seem to go beyond free trade area integration -- with the FTA, goods and capital are mobile while labor is immobile.
Diane