Globalization & Labor Market

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Globalization and Labor Markets

Globalization and Labor Markets


The increasing globalization in the developed and advanced economies has enhanced the integration of economies which has resulted in the broadening of gap between the less skilled labors and the skilled labors. It is due to the fact that globalization has increased the trade processes which lead to an increase in the foreign direct investment and capital mobility. These factors affect the labor markets and wages of the labors but there is a lack of increase in the wages of labors in advanced economies. The factor of technology has also affected the labor markets in advanced economies (Greg et al., 2004).

The transformation in the technological environment has resulted in the pervasive shift in demand for the skilled labors. This concept has deteriorated the demand of less skilled workers in the industry. The shift in the demand is a cause of increasing gap between the skilled and unskilled workers of advanced economy. Due to this fact, the inequality in the income of these two groups has increased to a greater extent. As a result of this inequality in the wages of labors, the unemployment has also enhanced among the less skilled labors (Javier &Paula, 2009).

This paper discusses the connection between the increasing globalization and its affect on the labor markets in advanced economies of the world. It also analyzes the factors that affect the labor markets in advanced economies of the world. The paper evaluates the implementation of labor market policies that addresses the concern of those who loses out from the forces of globalization.


The international integration of global markets in terms of products, technology and factors is a result of increasing globalization in the international market. The advancement in the international market of goods, services, factors and technology has particularly affected the labor markets in advanced economies. The globalization has severely impacted the wages of the labors in the market. The expansion in the trade of goods and services across borders and the increase in the flow of exchanging factors of production among the countries are the factors responsible for the increase in globalization (Florence & Irina, 2007). These factors lead to the increase in technological flow, foreign direct investment, capital flow and the migration. The advancement in the international markets has shifted the demand of labors from less skilled labors to highly skilled labors. Most of the advanced economies prefer the highly skilled labors for their international trade functions. This phenomenon has widened the gap between the wages of skilled labors and less skilled labors. The rise in this form of inequality has adversely impacted the economic and social consequences around the world (Javier &Paula, 2009).

The competition in the advanced economies is brought about by the advancements in international trade practices. The labor markets of the United States shows a greater effect of increasing inequality in the wages of labors due to globalization. There are some other advanced economies that are widely affected by the increasing inequalities ...
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