What Seperates Labor Markets in Developing Nations from Developed Nations? E-Book
Sebastian Müller
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- Herausgeber: GRIN Verlag
- Sprache: Englisch
- Veröffentlichungsjahr: 2003
Seminar paper from the year 2003 in the subject Economics - Other, grade: 2 (B), University of Freiburg (Economics), course: Job Markets in Developing Nations, language: English, abstract: The majority of the world’s population lives and works in developing countries. This paper examines what might be the difference between labor markets in developing and developed countries. The paper first briefly looks at various definitions of the term “developing country”. It then starts with the topic of migration, whose causes and consequences will be described. A look at labor legislation follows with a focus on unemployment protection and insurance as well as minimum wages. Then, the paper examines how wages are determined when labor is organized and how centralized the wage setting process takes place. The key difference that might be most intuitive of all is next. Dualistic markets, the concept of formal and informal sectors, are analyzed. The paper ends with various social aspects, such as the role of women, child labor as well as health and nutrition, that separate labor markets in developing nations from developing countries.
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What Separates Labor Markets in Developing Nations from
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Abstract
The majority of the world’s population lives and works in developing countries. This paper examines what might be the difference between labor markets in developing and developed countries.
The paper first briefly looks at various definitions of the term “developing country”. It then starts with the topic of migration, whose causes and consequences will be described. A look at labor legislation follows with a focus on unemployment protection and insurance as well as minimum wages.
Then, the paper examines how wages are determined when labor is organized and how centralized the wage setting process takes place. The key difference that might be most intuitive of all is next. Dualistic markets, the concept of formal and informal sectors, are analyzed. The paper ends with various social aspects, such as the role of women, child labor as well as health and nutrition, that separate labor markets in developing nations from developing countries.JEL Classifications
O17, O15, J82, J61, J51, J43, J31, H55, I31, J21
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1. Introduction
This paper will examine the differences of labor markets in developing and developed countries. More than three-fourths of the world’s people live in developing countries, but they enjoy only 16% of the world’s income - while the richest 20% have 85% of global income (World Bank 1995). This mass is not located in just one part of the world or on just one continent, but everywhere except Western Europe, the North American plateau, Japan, the former Anglo-Saxon Oceanic colonies, and a small number of exceptions. In fact, some of the recent conflicts might be due to the mentioned inequality. In order to understand some of the many causes for this inequality, we will analyze the key distinctions in respect to the labor markets.
The first part of this paper will briefly discuss what criteria will be used to classify a country as either developed or developing. The paper will then progress with the most important differences between developed and developing countries in respect to their labor markets. In order to limit the scope of this work, we will focus on sectoral distinctions, migration and institutions as our main points. The paper will then conclude with a brief description of dualistic markets and a glimpse towards selected social aspects.
2. Developed or Developing?
In this part, we briefly want to examine the various classifications and definitions of the term “developing country”. The question whether a certain country is developing or already developed always requires some kind of values, it cannot be answered in an objective way. However, one has to comprehend that the term “developing country” does not imply that the country is actually developing or progressing at all.
To allow for a better overview, we grouped all forms of measurement into two categories, namely the traditional and the new economic measures, following the work of Harris and Todaro in this field.
Traditional measures are focused on income terms, mostly ignoring social aspects such as schooling, access to food, literacy and so on. The most intuitive measure is the one of economic growth. Here, “development” would mean that a particular country’s Gross Domestic Product (GDP) grows at an annual rate of perhaps 5%. Instead of using an artificial GDP growth rate (here 5%), one could replace this value by population growth. In order to
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account for inflation, which can be a serious problem in many developing countries, “real” levels are used.
The newer and broader definitions of development were created in the 1970s. The traditional definitions led to some misclassifications, because a couple of countries with high rates of GDP growth were considered to be developing, although they suffered from increasing poverty.
Development should therefore be conceived of as a multidimensional process including major changes in social structures, popular attitudes, and national institutions as well as the acceleration of economic growth, the reduction of inequality and the eradication of poverty (Todaro/Smith 2003). However, such a measure would be of very high complexity. The traditional approaches are prone to two negative aspects, namely the exclusion of social aspects such as literacy, schooling, unemployment - among others - as well as the omission of income allocation. The newer definitions suffered from complexity for our purpose. For the remainder of the paper, we will use the World Bank’s classification of the world’s population by yearly-per-capita income, as measured by per capita gross national income. In the World Bank’s classifications system, countries with a population of at least 30,000 are classified as: Per capita GNI in US$ low income (LIC) 755$ or less lower-middle income (LMC) $756 - $2,995 upper-middle income (UMC) $2,996 - $9,265 high-income OECD $9,266 or more other high income $9,266 or more, and negative factors such as poor health and uneducated population
