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The Effect Of Globalization On The Labor Market

2094 words - 8 pages

After the break-up of the Soviet Union, globalization accelerated through the world. It includes the increasing integration of countries' individual economies, the rise in the world trade and multinational companies and the effect of large sums of money moving in and out of economies. People around the globe are more connected to each other then ever before. Information and money flow more quickly than ever. Goods and services produced in one part of the world are increasingly available in all parts of the world. International travel is more frequent. International communication is commonplace. This phenomenon has been titled "globalization". It cannot be denied that globalization has had an overwhelming positive influence. Millions of jobs have been opened up through the ever increasing productivity and efficiency of the global economy. However, as we see globalization helping many countries' economies, we also see that globalization forces many of the world population who are in poverty to stay there and several poorer countries are being lost in the frenzy of a global economy. Globalization - is the movement of goods, services and money capital or investment across international boundaries and in this way becomes a predominately economic phenomenon sweeping the world. Throughout which, what were formerly national companies become international conglomerates. Hence, countries are no longer seen as independent and closed sovereign states, but as part of one big economy.Migration, movement of people, especially of whole groups, from one place, region, or country to another, particularly with the intention of making permanent settlement in a new location, searching for new jobs in order to find a better living standards which could be unavailable in their home country.The international migration of capital and labor can be viewed as an arbitrating process that is similar to the movement that occurs between regions of a country. People living low wage or high unemployment an area of United States for example moves to states where wages and job opportunities are better. This movement reduces wage differentials by reducing the supply of labor where wages are low and by increasing the number of people seeking work in high wage areas. Transportation costs, preference for remaining in ones home region, and lack of information about job availability mean that this arbitrating process is not perfect, for it does not produce a single wage across all parts of the United States. It does, however ,limit the range of wage differentials, because low wage states consistently loose working age residents and higher wage states gain them.The international movement of worker reflects the same arbitrating process except that the barriers to migration are higher than in the case of domestic migration. Transportation is more costly, information about job availability is harder to obtain, and differences in language, culture, and even climate make preferences for...

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