Cambridge IGCSE Economics 0455 – Workers: Labour Mobility
Microeconomic decision‑makers – Workers
Objective
To understand the consequences of changes in the occupational and geographical mobility of labour and how these affect workers, firms and the wider economy.
Key Concepts
1. Occupational Mobility
Occupational mobility is the ability of workers to move between different types of jobs or occupations.
High occupational mobility – workers can retrain or acquire new skills easily.
Low occupational mobility – skills are highly specialised or there are barriers to retraining.
2. Geographical Mobility
Geographical mobility is the ability of workers to move from one location to another in search of employment.
High geographical mobility – workers can relocate without major obstacles.
Low geographical mobility – factors such as housing costs, family ties or immigration restrictions limit movement.
Factors Influencing Labour Mobility
Education and training opportunities
Availability of information about job vacancies
Transport and communication infrastructure
Legal and institutional barriers (e.g., work permits)
Personal and cultural considerations (family, language, community ties)
Consequences of Changes in Labour Mobility
Increased Occupational Mobility
Workers can adapt to technological change, reducing structural unemployment.
Firms face a more flexible labour pool, potentially lowering wage pressures.
Higher competition for jobs may increase wage differentials between skilled and unskilled workers.
Decreased Occupational Mobility
Higher risk of long‑term unemployment when industries decline.
Wage rigidity as workers cannot move to higher‑paying occupations.
Potential for increased government expenditure on retraining programmes.
Increased Geographical Mobility
Regional labour shortages are reduced; wages tend to equalise across regions.
Urban areas may experience pressure on housing and services.
Rural economies can benefit from inflows of skilled workers.
Decreased Geographical Mobility
Persistent regional unemployment and wage differentials.
Local firms may face higher labour costs if they must offer higher wages to retain workers.
Economic growth may be constrained in areas with limited labour supply.
Illustrative Example
Consider a country where a new technology reduces demand for coal miners but increases demand for renewable‑energy technicians.
If occupational mobility is high, former miners can retrain and fill the new jobs, keeping unemployment low.
If occupational mobility is low, many miners remain unemployed, increasing structural unemployment.
Simultaneously, if geographical mobility is high, workers can move from mining regions to areas with renewable‑energy projects, balancing regional labour markets.
Summary Table of Consequences
Change in Mobility
Effect on Workers
Effect on Firms
Effect on Economy
Higher Occupational Mobility
More job opportunities; ability to up‑skill
Greater flexibility; lower recruitment costs
Reduced structural unemployment; faster adjustment to shocks
Lower Occupational Mobility
Risk of long‑term unemployment; limited career progression