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Monday, July 10, 2006

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Arthur Eckart

The article states: "The Home Office's estimate is that there are half a million illegal migrants like Grace in the country, alongside the legal ones, and yet we still have a shortage of workers for low-skilled jobs. We need people like her." Normally, in rich countries, there are shortages of workers for high-skilled jobs and surpluses of workers for low-skilled jobs. I'm sure there are lots of low-skilled workers, who've dropped out of the labor force, because either jobs weren't available or wages were too low, who would accept higher paying jobs, if they existed. Also, those jobs would become more employee-driven rather than employer-driven (similar to the current consumer-driven economy rather than the producer-driven economy a hundred years ago). It seems, some people believe what's good for capital flows is also good for labor flows. Capital will flow to earn the greatest return and eventually in an efficient and unrestricted global market, the rate of return will equalize (adjusted for risks). Labor can also flow, until wages are eventually equal in every country. Consequently, it seems, labor inflows would initially increase the most in rich countries, because it's doubtful many would move to another country for lower wages.

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