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Labour

Sticky Feet: How Workers’ Reluctance to Move Can Reduce Gains from Trade

Elizabeth Ruppert Bulmer's picture

When economists think about price shocks, they consider how a change in price will affect the supply and demand of a product. But when that product is human – i.e., a worker – interpreting the impact of a price – or wage – shock is no longer cut and dried.

Just consider: If your wage was suddenly cut, would you remain in your current job despite the loss in earnings? Would you quit immediately, or look for a new job while continuing to work? How long could you survive on your lower earnings? Would you be forced to sell your house or other assets? How much money and effort would you invest in finding a better job? Would your personal circumstances allow you to take a better job in a distant location? Would you uproot your family for this job? 

Notes From the Field: Taking On Politics, Shifting Paradigms

Miles McKenna's picture

Editor's Note: "Notes From the Field" is an occasional feature where we let World Bank professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank. All interviews have been edited for clarity.

The interview below was conducted with Manjula Luthria, a Senior Economist in the World Bank’s Middle East and North Africa (MENA) regional division of the Human Development Network. Ms. Luthria's work focuses migration, labor mobility, and social protection. She spoke with us about her early experiences as a country economist for the Pacific Islands region, and how lessons learned there have come to inform the programs and projects her unit works on today.
 

First round of seasonal workers finishes in Australia

Tomas Martin Ernst's picture

I've just returned from country Australia evaluating the impact of one of the World Bank's (WB) recent development programs in the region. A WB initiative on the ground in Australia? What is the relationship between country Australia and the Bank's mandate of a world free of poverty?

Photo © Tomas Ernst/World Bank

Following several year's of research and advocacy, the Australian government opened its borders this year to the short-term supply of labour from the Pacific Islands (PIs). Evidence from New Zealand showed that when temporary labour mobility programs are well managed - with the appropriate level of monitoring to prevent worker exploitation and with the right incentives to minimize overstaying - the scheme is win-win for growers and PI workers. Growers enjoy a steady, reliable source of labour and PI workers receive income at least 4-5 times the GDP/capita of their home country.

My colleague Nathan and I travelled to Griffith, New South Wales where six ni-Vanuatu workers were preparing to head home following a six-month assignment picking, pruning and packing fruit. All workers reported a significantly improved financial position, with the majority sending regular remittances to their family members and local villages. In terms of skills acquisition, the training workers received on farms in Australia will benefit them when they return home to agriculture dependant economies of the South Pacific.