Chapter 10: Worker Mobility

1
Chapter 10 Worker Mobility
2
Worker mobility

• movement from one job to another.
• this may involve geographical changes, and/or
• movement from one employer to another.

3
Determinants of worker mobility

• workers move if the expected present value of the
  net benefits is positive

4
Benefits and costs of mobility

• psychic costs and benefits are included as well
  as direct costs and benefits.
• costs and benefits include
• friendships with co-workers and members of the
  community,
• family ties,
• working environment,
• non-pecuniary job benefits, and
• characteristics of geographical locations.

5
Factors affecting the mobility decision

• Individuals are more likely to move when
• the difference in wages or salaries is large,
• the worker is unhappy in his or her current job
  or location,
• the direct cost associated with moving is low,
  and
• benefits will be realized over a longer time
  period (T).

6
Geographic mobility

• more strongly affected by the pull from the
  destination than by the push from the original
  location.
• young workers are more likely to move.
• married workers are less likely to move.
• most moves are within county and state
  boundaries.
• chain migration is a common phenomenon in
  international migration.

7
Skills, income distribution, and migration

• when foreign countries have a lower degree of
  income inequality
• the return to human capital is likely to be
  higher in the U.S.,
• encouraging skilled individuals to emigrate to
  the U.S.
• when there is a higher degree of income
  inequality in foreign countries, low skilled
  individuals are more likely to emigrate to the
  U.S.
• in recent decades, immigrants to the U.S. have
  been less skilled than in the past.

8
Returns to migration

• households generally receive an increase in
  income as a result of immigration.
• wives often experience a decline in income as a
  result of immigration.
• immigrants generally receive an initial income
  that is below that of domestic workers.
• immigrants experience a more rapid increase in
  earnings than for domestic workers.
• rate of growth of immigrant income has been lower
  in recent decades.

9
Return migration

• a substantial share of immigration involves
  return migration.
• this may be a planned return after a period of
  time working in a high-wage area, or
• it may be the result of unrealized expectations.

10
Immigration restrictions

• until 1921 - only limited restrictions
• Quota Law of 1921 - established limits by country
  of origin
• Immigration and Naturalization Act of 1965 - set
  cap on total immigrants and reserved most spots
  for immigration related to family reunification.
  (No restrictions were placed on the number of
  political refugees)
• Immigration Reform and Control Act of 1986 -
  provided amnesty for some illegal immigrants and
  raised penalties on the hiring of illegal
  immigrants

11
Immigration and employment

• immigration increases labor supply in some labor
  markets.
• immigration raises labor demand in all labor
  markets.
• domestic employment (and wages) will rise in
  those labor markets in which labor demand rises
  by more than labor supply.
• domestic employment (and wages) will fall in
  those labor markets in which labor supply rises
  by more than labor demand.

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Overall effects of immigration on U.S. economy

• immigrant labor lowers the cost of goods,
  benefiting consumers.
• immigrants pay more in taxes than they consume in
  public services (this is especially true for
  illegal immigrants).
• immigrants bring their human capital with them
  when they immigrate.
• empirically, immigration appears to have little,
  if any, effect on the wage rates or employment
  prospects of domestic workers.

13
Employee turnover and job matching

• employee turnover is the result of job quits and
  layoffs.
• workers will engage in a voluntary quit only if
  the expected benefits outweigh the expected
  costs.
• economic efficiency may improve as a result of
  job quits and layoffs.

14
Determinants of turnover

• workers who receive a lower wage are more likely
  to quit.
• firms that offer lower wages have higher quit
  rates.
• women have higher quit rates.
• job quits increase during expansions and fall
  during recessions.
• layoffs rise during recessions and fall during
  expansions.
• workers are less likely to quit when the cost of
  quitting is higher.

15
Worker mobility and monopsony

• When there are no costs of mobility, the law of
  one price would apply in labor markets.
• Workers shift from job to job until the wage rate
  is the same everywhere for workers with a given
  mix of skills and abilities.
• Mobility costs, however, give firms some degree
  of monopsony power in labor markets.