Correlation between Labour flexibility and Growth?

[Ishaq]

Hello Warroom,

Has there been any studies with empirical analysis, that seek to determine the effects of labour rigidity/fluidity on growth and employment?

I was debating an individual that represents a trade union, in which he claimed, arguments that labour rigidity and restrictive labour legislation negatively effect growth & employment is poppycock purveyed through untruths, lack of evidence and moral myopia paraded as fact by monopoly capital.

Are there any economists that have argued the importance of labour fluidity(and the effects of labour legislation in general) on growth and employment in the long run?

 

[thehairyfairy]

There is a huge correlation between labour fluidity and growth, while long run supply will not be affected due to fluidity not changing the number of people in the labour supply, it will shift national income through aggregate demand (lead to a greater potential variety of goods/services) basically in a theoretical framework there will be shifts in the PPF according to how workers switch between sectors.

Bringing me onto the next point effects are probably limited as workers don't really switch between industries but rather there is an inter-industry switch. There is a huge amount of empirical evidence for the importance of labour fluidity and it's correlation with growth.

Personally I believe there are short run growth supply shifts due to labour fluidity, workers with greater innate ability get paid more as they are more versatile, but again a question is raised are you a master of one trade or a jack of them all, with greater fluidity. But nonetheless looking at it in the educational sector, graduating with two degrees is better than graduating with one.

Relating it to sports for example would you rather fight a fighter who is well rounded in Arts A, B and C, or a fighter who is extremely good at A but not so good at B and C.

 

[Ishaq]

I found this online:

http://www.clevelandfed.org/research/commentary/2011/2011-11.cfm