The movement of the labor force as a regulatory mechanism in the area of a single currency, the Eurozone and Albania  

Jonida Bicoku 1Fatmir Memaj 2Gert Dragoshi 3

1. University of Elbasan, Rruga Rinia, Elbasan 3001, Albania
2. University of Tirana, Faculty of Economics, Rruga e Elbasanit, Tirana 1000, Albania
3. Uniwersytet Łódzki, Wydział Ekonomiczno-Socjologiczny, P.O.W. 3/5, Łódź 90-255, Poland

Abstract

The purpose of this paper is to provide the impact of  mobility labour market in social and economic aspects. Labor market flexibility is defined in different ways by different authors. Some define flexibility as the speed at which the labor market can act as a regulatory agent in response to an economic shock. Others identify flexible labor market as a mechanism that helps in establishing a stable equilibrium, with a low degree of structural unemployment. Increasing labor market flexibility also occurs through the distribution of the labor force, between employers, countries or different tasks. This can be achieved through the promotion of geographical mobility of labor across regions and across borders. This article makes clear how the geographical mobility of labor is a regulation mechanism in the economy, which helps him adjust to economic shocks. The last development of the theory of OCA, said that the relative wage flexibility and capital mobility economies offer alternative ways for economy  to adapt with  economic shocks. Most importantly, if these mechanisms are strong enough, then a currency area may be able to respond effectively to asymmetric shocks even if geographical mobility of labor is lower. The combination of high capital mobility and wage flexibility encourage capital to derive toward regions with high unemployment. Low geographical mobility in the EU may not be a big  obligation, so it is sometimes perceived. However, it remains particularly important if other mechanisms regulating regional disparities are weak. Some  reasons put forward to the low level of geographical mobility throughout the EU and the decline of migration rates in recent decades. These includes: 1.The general increased unemployment  all over Europe since 1970, has a little incentive to move to a region of unemployment "lower" if opportunities are still limited (Pissarides and McMaster, 1990); 2.Narrowing of income per head across the EU: the gap between wages or income has been narrowed between EU member states, it has decreased incentives to migrate; 3.Structural factors: this includes the role of the housing market regulations and transactions costs, high use of fixed-term contracts, which carry a decrease in job security and in this way discourage labor mobility. 4. Cultural factors, such as language barriers and family networks. This article lists a number of reasons which explain the low level of geographical mobility throughout the EU - and the lower migration rates during last decades.Also it  will be given a picture of the mobility of the labor force in Albania in relation to past and current trends of motion.

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Presentation: Oral at Current Economic and Social Topics 2015, by Gert Dragoshi
See On-line Journal of Current Economic and Social Topics 2015

Submitted: 2015-11-26 21:38
Revised:   2016-03-07 03:20
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