Question

Companies shift physical resources and capital among national markets with relative ease. They can move production operations to where labor is cheaper, but laborers generally cannot move to markets where wages are higher.

Why does labor remain the most restricted component of production in terms of its international mobility? Explain.

Answer 1

The labor mobility in international trade is the movement of workers between countries. It is still most restricted production component in terms of its international mobility becuase of the following reasons:

-- Labors are often unwilling to accept international assignments to go unattractive locations for assignments, which is exacerbated by exposure of risk in few countries

-- The employees face issues with moving families for an international assignment. The social/family reasons are the main cause. Family concerns such as family relocation, children’s education, and adaptation to the new environment and maintaining links with home are the main concerns

-- The main challenge of having to comply with numerous laws and regulations. The main issues are the long waiting times for obtaining a work visa, payroll issues, and finding suitable housing.
-- They are unwilling to accept foreign assignments because it may adversely affect the career of the spouse