Wage convergence
Wage convergence is a term from economics and describes the equalization of different real wages in two countries. It arises from the international mobility of work, which is triggered by the differences in resources between the countries.
High labor mobility leads to less and less labor supply in low-wage markets , while supply in high-wage markets increases. Because of the increasing scarcity of labor in the low-wage markets, the wage rate rises there. In contrast, the wage rate falls in the high wage markets. There is therefore an approximation of wage rates on both sides.
Theoretical basis
In the model of wage convergence, the world consists of two countries, domestic and international. They each have two production factors, land and labor. Both countries produce only one good, "production". Normal trade is excluded in this world. Economies can only be integrated through the movement of land and labor. Since soil cannot be moved easily by definition, we are talking about a model of international labor mobility.
The relationship between the factor endowment on the one hand and the production of the economy on the other is the production function .
The slope of the production function measures the increase in production and is called the marginal product of labor .
Let us now assume that workers migrate between our countries. You move from home to abroad. This migration reduces the number of workers at home and thus increases the real wage there, while the real wage abroad falls due to population growth.
If there are no obstacles in the way of this movement, this process will continue until full wage convergence; H. until the marginal product of labor is the same in both countries.
Barriers to full wage convergence
Delays in labor migration and mobility barriers prevent wage differentials from being completely reduced.
Examples of mobility barriers:
- lack of specific talent / abilities due to lack of information
- monetary and emotional costs of changing jobs
- Moving costs
- Retraining costs
- Waiver of pension
- Loss of social ties (e.g. circle of friends)
- linguistic and cultural problems
- artificial market entry barriers:
- lack of work permits for foreigners
Examples
Mass migration
In the 19th and early 20th centuries, immigration was the main source of population growth in some countries. As a result, the population in other countries declined due to emigration . Since there were hardly any migration restrictions at that time, millions of people looked for a better life in foreign countries. So wandered z. B. Scandinavians, Italians and Eastern Europeans to the USA, Canada, Argentina and Australia (immigration countries), because there were above all higher wages and a lot of land. A comparison shows that in 1870 real wages in the immigration countries were significantly higher than in the most important emigration countries Italy, Norway, Sweden and Ireland. Over the next 40 years, real wages rose in both the immigration and emigration countries. However, the increase in the emigration countries was much greater than in the immigration countries. This shows that migration tended towards (if not completely) equalization of wages.
EU eastward expansion
The enlargement of the EU to the east in 2004 and 2007 also caused workers to migrate, as wage differentials between the new member states such as B. Poland, the Czech Republic and Hungary and the old EU countries are significant and the working conditions in the West are better. Highly qualified workers in particular (doctors, architects, engineers and other specialists) have migrated from Central and Eastern Europe to Western Europe. The result in their home country is a labor shortage that could worsen in 2011 if all EU countries have to open their labor markets. Most of the old member states still have restricted regulations, and Germany and Austria have not yet opened the labor market for the new members.
At the same time, however, unemployment is falling in the new EU member states and wages are rising. But rising wages make a location unattractive. So it is not surprising that investments in the future will increasingly be made in Eastern European countries that do not belong to the EU (e.g. Ukraine). The next few years will show what consequences the EU's eastward expansion will have.
Individual evidence
- ^ Paul R. Krugman and Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade. 7th edition, Pearson, Munich 2006, p. 210
- ^ Paul R. Krugman and Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade. 7th edition, Pearson, Munich 2006, p. 207
- ^ Paul R. Krugman and Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade. 7th edition, Pearson, Munich 2006, p. 209
- ↑ Cf. Heinz Werner, Economic Integration and Labor Migration in the EU [1] , 2001
- ^ Paul R. Krugman and Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade. 7th edition, Pearson, Munich 2006, pp. 211, 212
- ↑ See dwindling workforce in Eastern Europe Archived copy ( memento of the original from January 9, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Eurotopics press review February 1, 2007
- ↑ Cf. Berthold Forssman, Arbeitsmigration von Ost nach West Archived copy ( memento of the original from November 22, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Eurotopics magazine November 23, 2007
- ↑ Cf. Meike Dülffer, Freedom of Movement for Workers in the EU Archived Copy ( Memento of the original from June 24, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Eurotopics magazine January 25, 2007
- ↑ See Kilian Kirchgessner (Mladá Boleslav), Mehr Lohn http://www.ftd.de/politik/europa/:Agenda%20Mehr%20Lohn/195222.html?p=2 ( Memento from February 11, 2013 in the web archive archive .today ) FTD of May 4, 2007
Literature sources
- Paul R. Krugman and Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade. 7th edition, Pearson, Munich 2006