Problem

Structural rigidities in labour markets

Other Names:
Labour immobility
Lack of work force mobility
Labour market inflexibility
Restrictions on job mobility
Low occupational mobility
Unwillingness to change type of employment
Nature:

Mobility can take three forms: geographical (the movement of workers from one part of a country to another); occupational (movement from one job to another); and social (movement from one class of job to another). But labour is not perfectly mobile; wage differentials and relativities can be maintained as a result of a lack of any of these types of mobility. Thus wages may be higher in one part of a country than another, but equalization is prevented by the reluctance of workers to move (because, perhaps, of different customs or languages elsewhere). A factory worker may earn more than a farm labourer, but farm labourers may be prevented from moving to the better-paid job because of difficulties in obtaining the necessary skills; and in many countries, there is considerable social immobility - so that it is much easier, for example, for the son of a university professor to become a doctor than it is for the son of a farm labourer or docker. Two forms of mobility are important from the individual's point of view: mobility between occupational and status groups and mobility between industries. A somewhat different aspect of labour mobility is mobility within organizations arising from recruitment, promotion and retirement rules, and from wastage rates.

Incidence:

Both European and American labour inflexibility grow out of workers' efforts to create a stable social existence in insecure and uncertain economic environments. In Europe, this has been done by directly imposing employment security through legal restrictions in businesses' ability to lay off and discharge workers. In the USA, unions sought and won the control of processes through which scarce jobs are distributed among the labour force by restricting both how jobs are allocated among workers and what a manager can ask any given worker to do.

 

Problem Type:
D: Detailed problems
Date of last update
01.11.2017 – 23:08 CET