Sunday, July 25, 2010

Global labor markets

Capital markets have been global for quite some time, given the ease at which funds can be moved across borders.  Over the last 20 years, countries in Asia and Latin America with trainable labor available at relatively low wages have been able to attract investment from global corporations.  This has started to make the labor market global as well. 

Two recent WSJ op-eds suggest ways in which the US can become more competitive in that global labor market.  One theme I have been emphasizing on this blog is immigration policy.  Although I realize some people get very worked up about illegal immigration, there also are serious issues concerning the way in which the US prioritizes which legal immigrants can enter.  The Brookings Institution's Darrell West argues that we should allocate more visas to scientists, engineers, and entrepreneurs in what he calls an "Einstein immigration policy."  Only 15% of visas are allocated to employment purposes, some of which are agricultural workers, whereas 64% are allocated to family reunification.  A change along these lines would make immigrants an engine of economic growth instead of a drain on existing resources. 

Economists Martin Baily, Matt Slaughter, and Laura Tyson did a study for McKinsey to focus on ways that the US can make itself more attractive to multinational firms.  Their key finding: "Today the US is in an era of global competition to attract, retain and grow the operations of multinational companies that it's never faced before."  Dozens of other countries are making policy changes and seeing the kind of economic growth that makes them more and more attractive to multinationals.  Among the major concerns cited in the article: tax policy and limits on skilled immigration. 

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