International labour market dynamics

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1 Introduction

1.1 Definition

There are no quit accurate definitions of international labour market dynamics, since different authors have different research areas. These two definitions from internet are thought mostly accurate for this subject. The first is from which original is defined about labour market. It is said that:

"usually a comfortable market where workers find paying work, employers find willing workers, and where wage rates are determined. Labour markets may be local or national (even international) in their scope and are made up of smaller, interacting labour markets for different qualifications, skills, and geographical locations. They depend on exchange of information between employers and job seekers about wage rates, conditions of employment, level of competition, and job location."

In 2003, the OECD Glossary of Statistical terms identified labour market dynamics like this:

"Labour market dynamics refers to changes in jobs that take place as well as entries into and departures from economic activity affected by hiring, separations and the establishment and closure of self-employment activities", [web available]

1.2 Research Background

International labour market dynamics is a serious area have been researched by lots of professors, researchers and situations for many years.

1.2.1 Organization

The most famous situations are International Labour Organization (ILO) and Institutefor the Study of Labour (IZA).

ILO was founded in 1919 and it became the first specialized agency of the UN in 1946. It is dedicated to improving opportunities for human to get honest and productive work in conditions of freedom, equity, security and human dignity. The main aims of ILO are "to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue in handling work-related issues." (ILO, 1996-2009, [web available]) And the website of ILO is

IZA was started in 1998, which is a self-regulating non-profit research organization led by Director Klaus F. Zimmermann. It has a successful decade for high-quality research and policy advice focusing on present labour market problems. At this moment, there are 865 renowned labour economists which is an important backbone of the institute. And the economists are from all parts of the world cooperated with IZA by participating in individual projects and events. Also, junior labour economists and Ph.D. students who cooperate with IZA by participating in individual projects and events have formed 100 Research Affiliates. "Since it founded in 1998, IZA has published 4677 discussion papers as well as 19 books and 22 research reports". (IZA Publish Records,, [Accessed on 13/01/2010]) And the website of IZA is

Also, this subject is researched by many universities. For instance, Massey University seeks their research programme to supply to more detailed understanding of a variety of dynamics and mechanisms in labour markets. The website is CReAM is a Centre for Research and Analysis of Migration in London College which is directed by Christian Dustmann. The website is .

1.2.2 Authors

There are many professors and researchers in this subject their main research applied labour economics, labour migration, labour education, ethnic and racial origin. And mainly researched about how to improve labour life quality and work quality. Here are some famous researchers in these areas.

Ken Clark has worked in the economics department at the University of Manchester since 1990. His research is mainly in applied labour economics although he has also worked in the areas of experimental economics and criminology.

Christian Dustmann is Professor at the Department of Economics, University College London. His main research interests are in population economics (migration, economics of the family), and labour economics (education, wage structures, and earnings mobility), and he has widely published in these areas.

Paul Miller is Professor of Economics at the University of Western Australia. His primary research interest is labour market performance, particularly as it relates to educational attainment, gender, ethnic and racial origin.

1.3 Aims and objectives

1.3.1 Aims

The aim of this research project is to:

Get general understanding of international construction labour market dynamics.

It will focus on labour market dynamics in construction area.

1.3.2 Objectives:

In order to get this aim, it will research following the particular areas to get further research:

  1. How the relationship between construction projects affects international labour market.
  2. How to meet construction skill worker shortage in some developed countries which have great landscape but small population, for example, Russia and Canada. And to release construction workers employment pressure in counties such as India and China. Also, to map different globally requirements for construction labour.
  3. Try best to get some improvement of the ideas about international construction labour market dynamics.

1.3.3 Literature scope

According to the aim and objectives of this subject, the Literature scope is indentified as following:

  • Books, journals News, research reports and discussion papers relate to General labour market dynamics in recent 20 years (Note: the project need to research for dynamics of labour market it needs to know much earlier research result), in order to get know factors and research areas of general labour market dynamics.
  • Books, journals News, research reports and discussion papers relate to construction labour market, population of countries, construction projects and construction labour market migration in recent 20 years(Note: the project need to research for dynamics of labour market it needs to know much earlier research result), in order to know the situation of international construction labour distribution.

2 General international labour market dynamics

The researches have been done about international labour market dynamics are mainly focus on labour migration, labour welfare, methodology and labour market dynamics in some countries.

2.1 Labour migration

Many researchers have focused their research area on general labour migration and the problems by labour migration, such as welfare and wages, languages, education, government policy, generation and gender.

In 2006, Prentis D. stated that in some countries international and national trade unions accepted or send by governments can make a chief contribution in the direction of improving the migrant labours situation and in supporting the development of the economies in their own countries. Also, he emphasised that is mostly important in the case of developing countries which are continuing lost high-tech workers. Conversely, for developed countries they can get benefits by helping developing countries in the building of strong, sustainable economies.

Chiswick B.R. et al, October 2006 have published a paper about English speaking and non- English speaking labours migration in the U.S. labour market. It shows that immigrants from English-speaking countries earnings around 12 percent greater than the native born per hour when other factors are held regular. In comparison, immigrants from non-English-speaking countries earning around 12 percent less than native-born workers per hour when other factors are held regular.

Also, Dustmann C. et al (2008) suggest that the way immigration affects outcomes depends on native skill structure and assumptions about flexibility of capital supply of receiving countries. They point out that if the capital of receiving countries is perfectly elastic, then immigration will not affect labour market outcomes of native workers on condition that immigrants completely resemble natives in terms of skills because the economy will attract the extra labour force by expansion.

In 2000, Dustmann C. and Fabbri F. summarized that the UK have achieved a significant success of immigrant about language proficiency. However, ample of immigrants' experience about earnings are lost because lack of language fluency. Also they stated that Language have significant affects on earnings of UK Immigrants than other countries. Therefore, they considered the value of carry out schooling centres to help immigrants in their acquisition of the English language at an early period of their migration history. They want to use this method to give the immigrants experience due to a lack of English fluency for substantial earnings disadvantage.

Again Casey T. and Dustmann C. (2005) emphasised the importance of Language fluency of first generation immigrants. They considered Language fluency as a key condition for qualifying of an immigrant. Also, they offered further documents of the importance of language proficiency for first generation immigrants. They considered that poor language knowledge of immigrants may affect fluency of second generation immigrants, as well as labour market performance of second generation immigrants. Therefore, they stated that improvement of language fluency of first generation immigrants is also important in improving the performance of second generation immigrants.

Bauer T.K. et al had studied the importance for design of immigration policy in May 2000. And the study shows that it is might by important for the outlook of immigrant modification, labour market success and sentiments development of native tends immigrants by design of an immigration policy. And the paper concluded current immigration policies create correct way to particular groups, and these preferences contrast deeply across the core receiving countries. They summarized as following:

  • Canada and New Zealand focus on the selection of immigrants following the needs of their labour markets.
  • The U.S., ethnic German and Commonwealth in the UK put a preference on the immigration of family members of former migrants.

Boca D.D. and Venturini A. (2003) have concluded Italian emigration and immigration patterns from education and work shortage and have analysed the role of migration policies. They found that young Southern European workers do not like international emigration. Also, they found that the proportion of higher education workers in Italy is almost the lowest in Europe. Because of the unbalanced supply and demand of domestic labour force, they prefer immigrants from abroad to fill the labour shortage gap. Furthermore, they considered immigration policy can solve this problem for both long term and short term.

2.2 Research based on countries

There are also many publishes on research of labour market dynamics in some particular countries, for instance, the UK, the USA, Russia and German.

In 2005, Dustmann C. and Fabbri F. provided an inclusive picture relative to current British-born white population of the labour market outcomes of immigrant groups in Britain over the last 20 years. They have described basic features of the foreign-born population in Britain based on data from the LFS over the period from 1979 to 2004. The factors as following:

  • Their allocation to different labour market segments.
  • How their employment and participation probabilities have changed over time.
  • How particular outcomes compare to those of British-born whites.

In order to get more detailed data they have investigated four indicators of economic pooling data over the last 10 years: employment, labour force participation, self-employment and wages.

Clark K. and Drinkwater S. (2005) concluded that it has a general improvement in employment outcomes for ethnic minorities in England and Wales over the period between 1991 and 2001. It was mainly performed on the employment gap between Whites and three of the most disadvantaged groups: Black African, Pakistani and Bangladeshi males have a significant decrease. Moreover, he analyzed the improvement is based on endowments of employment-enhancing features, particularly educational qualifications.

In November 2006, Yashiv E. published a paper which focused on the literature's results of the US labour market dynamics. The article clarified out some key points of the issues suffered by the U.S. labour market dynamics research. Also it pointed out two issues which need to be further researched. One relates to the calculation of flows between the out of the labour force and employment pools, on which there is no agreement. The other is the lack of agreement between data sets on the relative instability of the job finding rate and the separation rate.

Chiswick B.R. and Miller P.W. (2008) have analyzed 2000 Census of Population in order to extended research on the determinants of naturalization among immigrants to the United States. The factors they used to research are as following:

  • Expanding the analysis of country of origin features,
  • Including better measures than have been used previously for political
  • Civil and economic rights and freedom
  • GDP per capita in the origin, among other variables.

As well, they used OLS and probity analyses to got separate analyses of gender. They found that if immigrants observed that the benefits from being naturalized are greater and the costs of satisfying the requirements are lower, they are more likely to become citizens. And they summarised that naturalization rates increase with the immigrant's level of schooling, duration in the US, proficiency in English, and service in the US Armed Forces, but are lower among sojourners.

Foley M.C. (1997) has concluded the Russia labour market dynamics since the dissolution of the Soviet Union in December 1991. And the following factors have been summarized:

  • The Russian labour market has been characterized by extensive labour market reallocation. The registration of unemployment and the buoyant level of aggregate employment relative to the severe output decline because original the limited extent of open.
  • With respect to demographic characteristics, women, older individuals, and married persons are less likely to change employment.
  • State segment jobs are relatively more stable than employment in the private sector.
  • Labour market transition have not been notably influenced the growing wage arrears crisis. Forced leaves frequency is powerfully and absolutely associated with changing jobs and dropping out of the labour force.

Münich D. and Svejnar J. (2007) have analyzed the unemployment in many Western and Central-east European countries. The examination was taken in into unemployment, outflow from unemployment. The result showed that the patterns which diverse initial conditions and subsequent paths were observed in the western part of Germany and Czech Republic, Hungary, Poland, and Slovakia are surprisingly similar. All the countries had aggregate demand shocks, structural shocks and hysteresis experience. They found that consequent restructuring and growth paths appeared to have been influenced by communist economies reforms and had some private enterprise activities before the evolution in these countries. Another important founds of their research is that the inflow rate was increasing gradually in the above countries. Finally, they summarized that the Central-East European economies have experienced much higher economic growth than West Germany. Also, usually, the firms in these countries have been rapidly raising labour productivity without a major net creation of jobs.

2.3 Employment and unemployment

In 2009, Andersson P. and Wadensjö E. have published a paper to show that a majority of the employees originate from the same region or country are highly segregated the firms of self-employed workplaces. And they assumed, in fact self-employed person is the one who employ people to the firm in order to interpreted as employers hire employees similar to themselves. Also, they have concluded four different reasons for the self-employed pattern:

  1. The self-employed employer hires people from their network which mainly consists of people similar to them.
  2. The self-employed have preferences against hiring people different from themselves.
  3. The supply of native workers for self-employed immigrants is lower than the supply for natives.
  4. Immigrants have a relative advantage in the production of ethnic goods and services.

Bauer T.K., 2004 stated that in the last 10 years, High Performance Workplace Organizations (HPWO) have been welcomed by a rising number of firms.

The core principle of HPWOs is that: firms can persuade workers to work harder through the authority's decision in order to get higher flexibility, better product quality and greater performance at an economic way. Also, the HPWOs system has been hypothesized that it can both benefits employers and employees by higher salary and raised work satisfaction. However, he suggested that HPWOs may have detrimental effects on workers by increasing work-related fitness problems. By using the data from the European Survey on Working Conditions (ESWC), he found that the HPWOs system can just creates little contribution to increased work satisfaction.

Schmitz H. and Steiner V. (2007) had focused on the impact of the German unemployment payment system and its recent reform on the duration of unemployment has concluded a number of significant results.

  1. Unemployment benefit reduces both the transition rate to employment and the out-of-the-labour-force state especially for women.
  2. Benefit-exhaustion concentrated around the month.
  3. The marginal effects of the amount of both UB and UA are negative and highly non-linear but of modest size.
  4. Although the magnitude of estimated effects differs between groups, these results are qualitatively similar for male and female in East and West Germany.

2.4 wages and social welfare

Hellerstein U. and Neumark D. (2005) have used Matched Employer-Employee Data to Study Labour Market Discrimination. The new ways for the presence of market-wide discrimination can be tested by the recent construction of matched employer data sets. This is a formal test for the survival of taste-based employer unfairness that generates a wedge between the relative market wages of worker groups and their relative productivities. Since it directly tests the theoretical forecast of the taste-based model, this kind of analysis is far more convincing than approaches based on remaining wage comparisons. As well it offered advantages over other methods of testing for discrimination.

Hellerstein J. and Neumark D. (2005) have used Matched Employer-Employee Data to Study Labour Market Discrimination. The recent construction of matched employer-employee data sets has allowed researchers to test in new ways for the presence of market-wide discrimination. Data at the establishment-level are used to estimate marginal productivity differentials between workers, which are in turn compared directly to market wage differentials. This is a formal test for the existence of taste-based employer discrimination that, if sufficiently pervasive, generates a wedge between the relative market wages of groups of workers and their relative productivities. Because it directly tests the theoretical prediction of the taste-based model, this kind of analysis is far more convincing than approaches based on residual wage comparisons, and offers advantages over other methods of testing for discrimination as well.

In 2009, Card D. summarized three key hypotheses of Cross-city and time series comparisons of the effects of different skill groups on relative wages are consistent:

  • Workers with below high school education are perfect instead of those with a high school education
  • "High school equivalent" and "college equivalent" workers are imperfect substitutes, with an order of 1.5-2.5 on elasticity of substitution
  • Within education groups, immigrants and natives are imperfect substitutes, with an elasticity of substitution on the order of 20.

The three hypotheses involved that the structure of relative labour requirement at the city or national level is compatible with a simple nested CES sub-production function for labour inputs with two skill groups at the upper level.

Aguilar G. and Rendon S. (2007) estimated propriety of wages yields by using a matched firm-workers dataset. And the estimation of accounts of wages yields has a larger labour cost elasticity of a long run and non-conditional labour has been demanded obtained by OLS. They have explained that the result is evidence for positive patterns matching between firms and workers: lager firms are matched with more productive workers.

Bassanini A. (2007) summarized the relationships between training and wages. Here are some factors they have found:

  • The estimates of lower wage effects of training are inaccurate rely on small or specific samples.
  • Compared to the abundant studies on wage effects of training, there are relatively few studies on the impact of training on productivity. This is mainly explained by the lack of data on productivity.

Rates of return estimates are even scarcer than productivity studies. This is because data on cost are even more difficult to find than data on output. When such data are available (in company case studies) it is unclear to what extent we

Kunze A. (2000) had created a survey about the determination of Wages and the Gender Wage Gap. And two questions about whether wage discrimination against woman have been identified. The two questions are:

  • Is the explained part of the gap close to the total raw gender wage gap?
  • Are the returns to work experience and the loss from time out work equal for men and women?

Finally, they found that the answers to bath questions are mainly depends on the accessibility of accurate measures of wages and parameters of interest in the wage model.

Bauer T.K. et al. 2008 have focused on facial effects of minimum wages in German. They considered higher salary for the raise in the requirements for high-skilled workers in revolve implies higher public revenues from income tax and social security contributions. Because the higher earnings costs further implies a decline of forms profits leading to a decrease in the public revenues from community taxes. Moreover, minimum wages will decrease public revenues, because the revenue gains from income tax and social safety assistance can not be waged by the decrease of revenues from community taxes.

Lehmann H. and Wadsworth J. (2007) stated that Russia is one of the highest levels of wage inequality country over the world. And they estimated that wage arrears may have been partly responsible for the failure of inequality to the situation in the first half of nineties. The majority of employees who have not received any monthly makes many conventional estimates of inequality can not be used. And they estimated that counterfactual estimates of the wage distribution in the absence of arrears indicate that average earnings would be some twenty to fifty percent higher. Because of that the earnings inequality in Russia back towards levels of difference currently experienced in Western countries like Britain and the United States.

3 Construction labour

Clarke L. (2006) concluded that many of the aspects of the British construction industry need for greater regulation such as:

"self-employment, labour -only subcontracting, actualisation, fragmentation, a lack of employee involvement, exclusiveness, informal networks of recruitment and selection, acute skill shortages, poaching, traditional skill demarcations, a sharp divide between operative and professional/ technical skills, a lack of training, poor health and safety, and low productivity." (Clarke L. (2006) "Valuing labour", Building Research & Information, 34:3, pp255)

She found it is difficult to consider the British construction industry's contribution to sustainable development. Since, there is not a completed thorough and industry-wide training system and a more constant, negotiated and incorporated structure of employment. And she argued that it is necessary for a clearly regulated wage structure that recognizes qualifications and the potential ability of the workforce, as well as, stable a regular employment open and inclusive to all groups. However, she found there are little documents for restricting the wage system. Because, she found that the solution to skill shortages focus on importing the necessary skilled labour instead of focus on training.

4 Research gap

4.1 Identify research gap

The researches have been done on labour market dynamics subject is mainly focus on the current situation of international labour market dynamics. The researchers mainly focus on 'what is the situation?' and 'how the labour market changes' from diversity aspects. However, there are little researcher paid their attention on the reasons for 'why labour market changes', particularly, on forecasting of construction labour market dynamics.

4.2 Research gap analysis

There are lots of ambiguous factors affect labour market dynamics. However, some factors can be defined such unbalanced population distribution, economic developed level, national infrastructure level, education and potential high skilled construction labour level and machinery level particularly in construction area between different countries. For these factors, it can have an approximate estimate on the future construction labour market dynamics.

For the unbalanced distribution problems, Russia and Canada owned the largest nation landscape all over the world. However, their national population is quite small, particularly for Russia whose population is continuing reduced. It cases some-times or many times they are suffering labour shortage. However, the opposite situation happens in China and Indian, China and Indian have the largest population in the world, but the landscape is much smaller than the two countries have been mentioned before. Also, it is one of the reasons for the high unemployed rate in these two countries.

For economic developed level, generally speaking, the Europe counties, northern American and Australia have higher economic developed level. However, the developing countries such as, Chinese and Indian economic developed level are improved quite quickly. The economic globalization well achieve to a higher level. The barriers of labour migration would be reduced in order to get global economic improvement.

For national infrastructure, for instance, in the UK almost everyone can drive their car until in front of their home. But country like China many people can not imagine that case. The infrastructure level in China is far away behind in the UK. That means China have lots of construction work to do in order to keep the same infrastructure level in the UK.

The different machinery level in construction area in developed countries and developing countries cased quite big difference in construction labour market requirements in different countries. For example, in China it needs about 200 labours in a 10 mile highway construction. However, in the UK it may be just 20 labours need for that case because of machinery.

4.3 Identify the research questions

According to the research gap analysis, the following research questions can be identified.

  1. What are the factors which affect construction labour market dynamics?
  2. What are the motivations and barriers for labour immigrants?
  3. What is the world population distribution and immigrants tend?
  4. What is the infrastructure level of different countries? (may be take two or three countries as examples)
  5. How many students study construction related subjects?
  6. What is the machinery level in different countries?

5 Conclusions

This literature review is for the research project of international labour market dynamics. The researchers are mainly focus on general international labour market dynamics from the aspects such as: labour migration, labour welfare, methodology and labour market dynamics in some countries. However, there are little researchers on forecasting of construction labour market dynamics. Therefore, the project will be research on forecasting of construction labour market dynamics.



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  • Bauer T. K. et al (2009) "Fiscal Effects of Minimum Wages: An Analysis for Germany" German Economic Review, 2009, 10(2), pp224-242
  • Boca D.D. and Venturini A. (2003) "Italian Migration" European Migration - What Do We Know? Oxford University Press, 2005
  • Card D. and Sara Rica S. (2006) "The Effect of Firm-Level Contracts on the Structure of Wages: Evidence from Matched Employer-Employee" Data Industrial and Labour Relations Review, 2006, 59 (4), pp573-592
  • Casey T. and Dustmann C. (2008) "Intergenerational transmission of language capital and economic outcomes" Journal of Human Resources, Vol. 43, pp 299-324
  • Chiswick B.R. at el (2008) "How Immigrants Fare Across the Earnings Distribution: International Analyses" Industrial and Labour Relations Review, 2008, 61 (3), pp353-373
  • Chiswick B.R. and Paul W. Miller P.W. (2008) "Citizenship in the United States: The Roles of Immigrant Characteristics and Country of Origin" Ethnicity and Labour Market Outcomes (Research in Labour Economics, Vol. 29), Bingley, 2009, pp91 - 130
  • Clark K. and Drinkwater S. (2009) "Dynamics and Diversity: Ethnic Employment Differences in England and Wales, 1991-2001" Ethnicity and Labour Market Outcomes (Research in Labour Economics, Vol. 29), Bingley, 2009, pp299 - 333
  • Clarke L. (2006) "Valuing labour", Building Research & Information, 34:3, pp246-256
  • Dustmann C. and Fabbri F. (2003) "Language Proficiency and Labour Market Performance of Immigrants in the UK" Economic Journal, 2003, 113 (489), pp 695-717
  • Dustmann C. and Fabbri F. (2005) "Immigrants in the British Labour Market", Fiscal Studies, vol.26, no.4, pp.423-470
  • Kunze A. (2008) "The Determination of Wages and the Gender Wage Gap: A Survey" Empirical Economics, 2008, 35, pp63-76
  • Lehmann H. and Wadsworth J. (2007) "Wage Arrears and the Distribution of Earnings in Russia", Research in Labour Economics, 2007, 26, pp125-155
  • M&uuml;nich D. and Svejnar J. (2007) "Unemployment in East and West Europe", Labour Economics, 2007, 14 (4), pp681-694
  • Thomas K. Bauer T.K. (2000) "Immigration Policy, Assimilation of Immigrants and Natives' Sentiments towards Immigrants: Evidence from 12 OECD-Countries" Swedish Economic Policy Review, Vol. 7 (2000), pp11-53
  • Yun M. (2007) "Decomposition of Wage Differentials", Journal of Economic and Social Measurement, 32 (1), pp15-22)