Schiff, Maurice
Labor Market Integration in the Presence of Social Capital Schiff, Maurice [electronic resource] / Schiff, Maurice - Washington, D.C., The World Bank, 1999 - 1 online resource (32 p.) - Policy research working papers. World Bank e-Library. .
November 1999 - Social capital raises productivity and falls with labor mobility. Because labor mobility generates a negative externality, integration of labor markets results in too much mobility, too low a level of social capital, and an ambiguous effect on welfare. Trade liberalization is superior to labor market integration because it reduces mobility and the negative externality associated with it. Labor market integration is typically assumed to improve welfare in the absence of distortions, because it allows labor to move to where returns are highest. Schiff examines this result in a simple general equilibrium model in the presence of a common property resource: social capital. Drawing on evidence that social capital raises productivity and falls with labor mobility, Schiff's main findings are that: Labor market integration imposes a negative externality and need not raise welfare; The welfare impact is more beneficial (or less harmful) the greater the difference in endowments is between the integrating regions; Whether positive or negative, the welfare impact is larger the more similar the levels of social capital of the integrating regions are and the lower the migration costs are; Trade liberalization generates an additional benefit-over and above the standard gains from trade - by reducing labor mobility and the negative externality associated with it. Trade liberalization is superior to labor market integration; The creation of new private or public institutions in response to labor market integration may reduce welfare. Schiff shows that the welfare implications depend on two parameters of the model, the curvature of the utility function and the cost of private migration. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to understand the link between market performance and welfare. The author may be contacted at mschiff@worldbank.org.
10.1596/1813-9450-2222
Bonds
Capital
Cred Economic Performance
Debt Markets
Economic Theory and Research
Emerging Markets
Equilibrium
Finance and Financial Sector Development
Financial Literacy
Free Trade
Goods
Health, Nutrition and Population
Human Capital
Labor Markets
Labor Policies
Liquidity
Macroeconomics and Economic Growth
Markets and Market Access
Negative Externalities
Population Policies
Private Sector Development
Production Function
Production Functions
Public Good
Social Capital
Social Development
Social Protections and Labor
Trade Barriers
Transactions Costs
Transport
Transport Economics, Policy and Planning
Unemployment
Utility
Utility Function
Voters
Welfare
Labor Market Integration in the Presence of Social Capital Schiff, Maurice [electronic resource] / Schiff, Maurice - Washington, D.C., The World Bank, 1999 - 1 online resource (32 p.) - Policy research working papers. World Bank e-Library. .
November 1999 - Social capital raises productivity and falls with labor mobility. Because labor mobility generates a negative externality, integration of labor markets results in too much mobility, too low a level of social capital, and an ambiguous effect on welfare. Trade liberalization is superior to labor market integration because it reduces mobility and the negative externality associated with it. Labor market integration is typically assumed to improve welfare in the absence of distortions, because it allows labor to move to where returns are highest. Schiff examines this result in a simple general equilibrium model in the presence of a common property resource: social capital. Drawing on evidence that social capital raises productivity and falls with labor mobility, Schiff's main findings are that: Labor market integration imposes a negative externality and need not raise welfare; The welfare impact is more beneficial (or less harmful) the greater the difference in endowments is between the integrating regions; Whether positive or negative, the welfare impact is larger the more similar the levels of social capital of the integrating regions are and the lower the migration costs are; Trade liberalization generates an additional benefit-over and above the standard gains from trade - by reducing labor mobility and the negative externality associated with it. Trade liberalization is superior to labor market integration; The creation of new private or public institutions in response to labor market integration may reduce welfare. Schiff shows that the welfare implications depend on two parameters of the model, the curvature of the utility function and the cost of private migration. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to understand the link between market performance and welfare. The author may be contacted at mschiff@worldbank.org.
10.1596/1813-9450-2222
Bonds
Capital
Cred Economic Performance
Debt Markets
Economic Theory and Research
Emerging Markets
Equilibrium
Finance and Financial Sector Development
Financial Literacy
Free Trade
Goods
Health, Nutrition and Population
Human Capital
Labor Markets
Labor Policies
Liquidity
Macroeconomics and Economic Growth
Markets and Market Access
Negative Externalities
Population Policies
Private Sector Development
Production Function
Production Functions
Public Good
Social Capital
Social Development
Social Protections and Labor
Trade Barriers
Transactions Costs
Transport
Transport Economics, Policy and Planning
Unemployment
Utility
Utility Function
Voters
Welfare