Tuesday, December 22, 2009

Encouraging Labor Mobility

The Irish have found a way to encourage international labor mobility: reduce unemployment benefits as part of their fiscal austerity plan.

"Yet some have criticized the government for what they view as a thinly veiled message encouraging members of a new generation of Irish to set forth overseas to find their fortune, as many of their parents, grandparents and great-grandparents did. The new cuts specifically target Irish 20-somethings who cannot find work, reducing their unemployment benefits, in some cases, by as much as 30 percent.

Analysts say thousands of young Irish have left for Britain, North America and Australia in recent months, with thousands more expected to emigrate next year.

"I feel like the government is telling us that Ireland can't support us anymore and we should take our chances elsewhere," said Shaun Kavanaugh, 25, an unemployed electrician. "I'm taking the hint. As soon as I save up enough money for my flight to Canada, I will be on that plane. I thought those days were over in Ireland."

But there is hardly anything wrong about people moving to where the jobs are. Quite to the contrary as it means lower global unemployment and increase global output. And reduced unemployment benefits won't just promote international but also intranational and intersector labor mobility.

America by going the other way is by contrast increasing unemployment.