Labor Migration, Social Membership, and Race
In the preceding chapters we have discerned two distinct approaches to the problems of labor supply that arise when economic growth and rising living standards create citizens’ expectations that clash with a persisting demand for low-wage, unskilled labor. One solution to the problem, illustrated here by the Israeli experience, is to expand the labor supply by drawing in labor from abroad. The main alternative (apart from sending some production processes abroad) is more complex and consists of restricting the available labor force to citizens; the restriction forces an increase in wages, particularly at the low end of the labor market, which then gives employers an incentive to invest in making that labor more productive. This path is embodied in the postwar Japanese experience, though more recently distortions in the Japanese economy have produced wage increases in some sectors even without significant advances in productivity.
KeywordsLabor Supply Labor Migration Foreign Worker Foreign Labor Economic Governance
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