Thursday, March 6, 2014

Migration of Labor Skills as a Function of Opportunity

Labor is an important component of economic development. Employers need skilled labor to produce new products and lower skilled labor to fulfill standard functions. When areas gain or lose their workforce it has a natural impact on the economic strength of that area. Research by Son and Noja, 2013) delves into labor’s economic contributions as well as the influx/outflux of human capital in new EU countries. The general findings can be applied to other areas and highlight the need to match skills to the market. 

When surplus labor exists, the unemployment rate will be higher. In this study, the labor was broken into low and high skilled labor for analysis. Higher unemployment causes an outflux of individuals seeking opportunities in other geographic locations where jobs are plentiful. This is a natural cause of opportunity matching skills to create an employment opportunity. 

Those that update their skills and find new types of employment (labor shift) may more easily find future opportunities. It is an economic and personal choice based upon the ability to attend school, obtain new certificates, or move to locations that offer employment opportunities. There is a level of personal and societal adjustment that occurs in response to economic shifts in the market. 

When both low and high-skilled labor migrates out of an area it indicates the fundamentals of the infrastructure are not in place. Skill levels are not matching opportunities and those with the most resources can move to other areas to find greater opportunities. Losing highly skilled labor means  creating new opportunities will be more difficult in the future as a result of human capital drain. 

Destination countries that receive highly skilled labor have an easier time growing. This growth is based upon the skills received and whether or not they are matching the economic needs of the area. Sending countries slow down in technological progress, innovation and GDP per capita growth rate while receiving countries increase in their abilities to enhance economic growth. Sending countries will need to educate their populations to create greater home abilities and rebalance available skills to the market.

Son, L. & Noja, G. (2013). The role of the human capital and investment in human capital within the sustainable socio-economic development. How labour force migration affects competitiveness? Theoretical and Applied Economics, 20 (1).

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