Labor Markets and Integrating National Economies (Electronic book text)

The international economy is becoming increasingly integrated. The passage of the North American Free Trade Act and the successful completion of the final round of negotiations under the General Agreement on Tariffs and Trade have helped to reduce the barriers to trade and capital mobility. Other policies, such as those being pursued by the European Union nations to promote the mobility of workers across national boundaries, play an important role in international economic integration. This book, part of the Brookings Integrating National Economies series, provides an in-depth examination of the role of labor markets in the international economy. Ronald G. Ehrenberg evaluates a wide range of labor market characteristics and their effects on trade flows, capital mobility, and labor mobility. He highlights what these characteristics are, how they vary across nations, and how they can help reduce barriers to integration. To illustrate the variations that exist across nations, Ehrenberg describes the labor market practices of the United States, Canada, the Western European nations, and Mexico. He discusses the pressures that often arise from integration to change labor market institutions and policies and explores how certain policies influence the pace at which integration proceeds. Ultimately, economic integration, either with or without free labor mobility, poses issues relating to the trade-offs between efficiency and equity and to what each nation judges to be desirable levels of labor market standards. Ehrenberg argues that economic integration can take place between nations even though they may have very different levels of labor market standards and policies. However, he concludes,the political process may allow the benefits from increased trade and labor-capital mobility to be fully achieved only if nations systematically develop ways to have some of their labor market policies converge.