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Why do workers migrate from labour abundant countries to countries with a scarcity of labour

Home, - What does marginal product of labour mean

Question - a. What does the expression "marginal product of labour" mean?

Answer -

Marginal product of lanbour is defined as the change in the output levels of the entity with the employment of an additional labour within the entity.

Marginal product of labour = Change in Total Product/ Change in number of labour

Marginal product of labour indicates the additional output when a new labour is hired by the entity. For example, let's say total product of an entity is 101 units when there are 3 labours and the same increase to 110 units when there are 4 labour. In this case, Marginal prosuct of labour is 9 units.

b. Why do workers (skilled and unskilled) migrate from labour abundant countries to countries with a scarcity of labour?

Answer -

The workers migrate from labour abundant countries to countries with scarcity of labour because in such country, the demand of labour resource is quite high and at reasonably higher wages. The labour. In labour abundant countries, the supply of labour is more than demand of labour, thus creating huge employment and therefore such unemployed labour will resort to move to such countries where there is scarcity of labour. The country with scarcity of labour has generally higher demand of labour resource but due to limited labour supply, wage rate I comparatively higher than equilibrium price. Thus, the labour find it attractive to move to such countries where there is scarcity of labour to get employment and at higher wages.

c. How has that migration of labour been of advantage to other countries?

Answer -

Migration of labour has been of advantage to other countries due to the following reasons:

1. It helps in the growth and prosperity of the countries in which the labour migrateto.

2. Such migration provides a valuable skilled and unskilled labour resource to the country in which they migrate and thus increase the supply of labour resource in such country.

3. Migration of labour resource helps in maintaining the economic competitiveness in the country in which they migrate.

4. Due to an increase in the supply of labour resource, the gap between demand and supply of labour resource reduces dramatically and thereby economy move toward equilibrium point. Such point corresponds to equilibrium qunatity of labour resource and equilibrium wages.


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