#economics #factorsofproduction
The mobility of factors of production refers to the extent to which resources
can be changed for one another in the production process. For example, farming
can be very traditional in some parts of the world and rely heavily on labour
resources. However, in other countries, farming is predominantly mechanised,
with a heavy reliance of capital resources.
Economists usually talk about labour mobility, although factor mobility can
apply to any factor of production. For example:
Land might be used for various competing purposes, such as to grow certain
fruits and/or vegetables, or to construct buildings such as housing, hospitals
or schools.
Capital equipment might be used for different purposes too. For example, the
same machinery in the Coca-Cola factory can be used to produce Coca-Cola,
Sprite and/or Fanta.
Entrepreneurs can also be mobile. For example, Meg Whitman, chief executive
offi cer (CEO) of Hewlett-Packard, was previously a vice president of the Walt
Disney Company and CEO of eBay.
Labour mobility can be broken down into two categories.
Geographical mobility
Geographical mobility refers to the willingness and ability of a person to
relocate from one area to another for employment purposes. Some people may not
be geographically mobile for the following reasons:
Family ties and related commitments — people may not want to relocate as
they want to be near their family and friends. There may be other commitments
such as schooling arrangements for children (it can be highly disruptive to
the education of children who have to move to a new school in a new town or
country).
Costs of living — the costs of living vary between regions and countries, so
may be too high in another location, making it uneconomical for a person to
relocate. For example, a bus driver may fi nd it impossible to relocate from the
countryside to the city because house prices are much higher in the city and
he or she therefore cannot afford to purchase a home in the city. By contrast, a
banker may be offered a relocation allowance to move to another country and
the potential earnings are much higher, so the banker has greater geographical
mobility than the bus driver.
Occupational mobility
Occupational mobility refers to the ease with which a person is able to change
between jobs. The degree of occupational mobility depends on the cost and
length of training required to change profession. Developing and training
employees to improve their skills set improves labour occupational mobility (as
workers can perform a greater range of jobs).
Generally, the more occupationally and geographically mobile workers are in a
country, the greater its international competitiveness and economic growth are
likely to be.
What role does government policy play in the mobility of labor and capital?
How does the mobility of land as a factor of production differ from other factors?
What are the economic implications of high mobility of factors of production?
How do international trade agreements impact the mobility of factors of production?
What are some examples of industries that benefit from high factor mobility?
How does the mobility of factors of production affect income distribution within a country?