Question

-Should free movement of labor be included in free trade agreements? What are the benefits and drawbacks?

-Why have labor force participation rates been falling for over twenty years?

Answer 1

The free movement of labour is one that allows stability of wages across countries through the changes in the demand and supply of labour. This can however not be included in free trade agreements as the flow of labour cannot be controlled inspite of strict immigration laws. Such a provision thus cannot be included in free trade agreements as it will be almost impossible to adhere to and is not enforecable. If they are included, the benefits will be that wages will be carefully regulated over time but due to the absence of of control on the flow of labour between countries,they cannot be included in such agreements.

Labour force participation rates are calculated as the portion of the population that are willing and able to work. The unemployment rate is calculated as a proportion of the people who are willing and able to work. The labour force participation rates have been falling in recent times as due to rising unemployment rates and the struggling nature of the economies around the world in the wake of the sub prime crisis. This has been more so in the west than the rest of the world.