Midterm Coverage GLOBALIZATION, LABOR MARKET, AND

INEQUALITY and Migration

GLOBALIZATION, LABOR MARKET, AND INEQUALITY

Though globalization is increasing labor market integration and income
inequality, policymakers should help workers adjust to a changing world
rather than erecting protectionist measures

THE IMPERFECT INTEGRATION OF LABOR MARKET

• We are very far from a global labor market, as evidenced by a wide
disparity in wages.

• In 2008, a Chinese manufacturing worker earned about one-twentieth the

wage level of a U.S. manufacturing worker; a Mexican, one-sixth.

• That gap, however, is narrowing in part due to globalization. From 1999 to

2009 (the year of the worst global recession since the 1930s), average real
wages rose by about 0.5 percent per year in advanced countries, compared
to about 1.5 percent in Africa and Latin America, and almost 8 percent in
developing Asia.

GLOBAL FORCES BEHIND WAGE CONVERGENCE

 Increased migration probably plays only a small role in wage
convergence. The stock of emigrants from developing countries is just 2
percent of their population, so emigration has little role in raising wages
by limiting the growth in labor supply in developing countries.

 Trade can promote wage convergence even when workers do not move.
Developing countries with abundant labor export goods intensive in
labor, so trade induces their wages to rise relative to rich countries,
which have less labor and plenty of capital.

 Foreign direct investment (FDI) in capital-scarce developing countries

can raise the productivity of workers, and thus their wages, by
transferring management skills, capital, and technology, and in the
process sometimes outsourcing jobs from advanced countries.

 This type of investment did not generate jobs directly in advanced

countries, but may have reduced the need for domestic borrowing that
would have crowded out domestic investors. On balance, it is therefore
not clear whether capital flows to and from developing countries have
played a large role in promoting wage convergence, though capital flows
taking the form of FDI almost certainly have.
GLOBALIZATION OF THE LABOR MARKET AND INCOME
DISTRIBUTION
These forces of globalization have been associated with both rising living
standards and a deterioration in income distribution in advanced countries:
Low-skilled wages have remained flat or even declined, while high-skilled
wages have increased sharply. Labor income fell as a share of GDP by 3.5
percentage points from 1993

INEQUALITY has increased in many developing countries. According to the

International Labor Organization, of the 28 developing countries for which
data are available, 21 experienced increased income inequality from the
early 1990s to the mid2000s. As in advanced countries, openness to trade
and foreign investment have increased the relative return to skilled labor and
capital, while reducing the relative return to unskilled labor.

HOW SHOULD POLICYMAKERS RESPOND?

 In designing safety nets, policymakers in developing countries should try
to protect workers if unemployed or injured, but would be ill-advised to
erect the barriers to firing common in many advanced countries that
reduce the overall demand for labor in formal (that is, decent)
employment.

 Despite their wealth, the labor challenge facing advanced countries, still
mired in high unemployment in the wake of the crisis, is more daunting.
Identifying the correct policy response is made more arduous by the
difficulty of attributing the worsening of income distribution with any
precision to trade, technology, demography (increased female
participation in the labor force, for example), or other factors such as
increasing returns to education.

 Taxes are only part of the problem. Poverty has also been driven by an
erosion of the quality of public goods. Most importantly, public education
in many advanced countries, beginning with the United States, no longer
offers the same opportunities for advancement that it did in the first half
of the twentieth century. Increased investment in education and training
is all the more important with rapid technological progress and shifts in
the demand for workers with different skill levels.

WHY DO FILIPINOS CHOOSE TO WORK ABROAD?

HERE ARE THE REASONS WHY FILIPINOS WORK ABROAD
 Low Wages
 Poor Economic Conditions
 High Unemployment Rates
 Strict Qualifications for Certain Role
PERSONAL GROWTH
Another reason why Filipinos work abroad is to pursue personal growth
opportunities. Many Filipinos aspire to pursue higher education abroad,
explore different cultures and lifestyles abroad, or own a house or property
abroad.

 Education Opportunities
 Job Variety
 Opportunity to Renew Contracts
 Real Estates Investment

RESIDENCE PERMIT FOR OFW

For many Overseas Filipino Workers (OFWs), the prospect of working
abroad is not just about economic upliftment or personal growth. One of the
oftenunderestimated motivations is the potential to secure a residence
permit in their host country. This permit, often seen as a golden ticket, offers
a myriad of opportunities and benefits that go beyond the immediate job at
hand.

FAMILY & SOCIAL FACTORS

The last reason why many Filipino choose to work abroad is related to family
and social factors. Filipinos are family-centric and put their family at the
center of their lives, especially their children and parents. Working abroad
allows them to support their family members, bring their families abroad, or
reunite with their loved ones.

 Supporting Family Members

 Opportunity to Bring Their Families Abroad
 Reuniting with Loved Ones

CONS
 Detachment from Family CONS
 Lack of Opportunities when you Return Home
 Subject to Exploitation Culture Shock and Discrimination
 Legal Risk and Uncertainties
Migration

Consequences of Migration
 Migration has been happening across the world for hundreds, if not
thousands of years. - People move from one place to another for various
reasons (war, persecution, seeking better opportunities, unemployment,
etc.)

 This migration of people can result in consequences for both the place
they left behind and their new place of residence. These consequences
can be economic, social, political and demographic.

Causes of Migration
There are many different reasons why migration occurs. Let's take a look at
the 'push and pull factor' idea, a helpful way of understanding the movement
of migrants.

PUSH FACTORS - are the things going on in their place of residence that
make people want to leave.
• Extreme weather
• Lack of economic or social opportunities
• Lack of safety

PULL FACTORS - are those which attract people to a place.

• Improved job or economic opportunities
• Better health care
• Equality
• Better political conditions

SOCIAL EFFECTS OF MIGRATION

 CULTURE & DIVERTSITY - Culture is the shared beliefs, values and
traditions of a demographic. This also extends to food, music, religion,
art, dress and language. There are many different cultures across the
world, and through migration, most prominently, international migration,
these cultures can be shared and brought to new places.

 ASSIMILATION - Assimilation is the integration of migrants into their

host country.

SOCIAL CONSEQUENCES OF MIGRATION

 CULTURAL CLAS - Migrants may have entirely different cultural values
or characteristics to those of a host nation. When there are differences
between the host and the origin country, tensions may build up between
them. This is often called a cultural clash or cultural conflict

 DISCRIMINATION - International migration may create spaces for

discrimination. Migrants may have a different ethnicity, religious practice,
 or cultural characteristics from their host nation, or there may be
language barriers, which can sometimes cause migrants to be
discriminated against in every aspect of their everyday lives, either
directly or indirectly.

SOCIAL CONSEQUENCES OF MIGRATION

 SEGREGATION
- Segregation divides people up due to their differences.
- When international migration occurs, migrants may face racial or
ethnic segregation, which may occur in different forms. In large urban areas,
there often exists designated neighborhoods for different ethnicities. This
can happen due to migrants being treated differently, affecting their access
to certain types of housing, or if local populations make active choices to live
away from migrant groups.

SOCIAL CONSEQUENCES OF MIGRATION

 SMUGGLING AND HUMAN TRAFFICKING
- The process of international migration is often complicated, and
immigration laws can be very strict. This can lead potential migrants to hire
the services of illegal immigration officers, commonly known as smugglers or
coyotes.
- Human trafficking is something different to smuggling. Human
trafficking occurs when people (migrants, but human trafficking also happens
domestically) are forced into undertaking unpaid forced labor, or sex work,
for example.

POLITICAL CONSEQUENCES OF MIGRATION

 ASYLUM SEEKER - a person who has fled a country due to a threat to
their security, but has yet to be granted confirmation of refugee status.
Being granted refugee status isn't always guaranteed.
 REFUGEE - a person who has left their home country due to a threat to
their security.
POLITICAL CONSEQUENCES OF MIGRATION
 INTERNATIONAL BORDERS - are not always well-defined. Some
territories share border control authorities from different countries, and
this can cause conflict. Regarding migration, it becomes unclear who is
responsible for the migrant movement

 REFUGEES AND EUROPEAN UNION POLICY - within the European

Union, protecting the rights of refugees and asylum seekers is important.
There are laws and processes that come with this; however, these
procedures and laws have not always been upheld.

ADVANTAGES OF MIGRATION:
• Remittances from international migrants
• Migration from rural areas
• Migrants act as agents of social change
• Migration leads to intermixing of people from diverse cultures

DISADVANTAGES OF MIGRATION
 HUMAN CAPITAL FLIGHT AND ECONOMIC DEVELOPMENT - With
international migration, origin countries often lose large proportions of
the highly skilled workforce. Developing countries, such as India, suffer
from the loss of this highly Trained workforce, due to migration. This is
called Human Capital Flight or Brain drain, which negatively impacts
economic growth.

 POPULATION AND DEMOGRAPHIC CHANGES International

migration can affect the population and demographics of both host and
origin countries. Through migration, the population in the host country
increases. This can increase pressure on public services, as more
people are using or needing them.

• Unregulated migration to the metropolitan cities has caused overcrowding.

• Rural-urban migration
• High out-migration
• Overcrowding of people due to rural-urban migration
• Over-exploitation of natural resources