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This chapter explores three questions: what global institutions regulate the international migration of low‐skilled workers (ILO and UN Conventions, regional and bilateral agreements), what processes have shaped and influenced the development of international institutions governing low‐skilled migration (post‐war development in Europe for 1949 ILO, oil shock and recruitment halt for 1975, UN in 1990), and what rationale would there be for multilateral regulation in this area of international migration (rights to protect low‐skilled migrants; efficiency with more movement, assuming full employment). In each case it argues that the global governance of low‐skilled labour migration has been characterized by a ‘rights vs numbers’ trade‐off.

This chapter examines the global governance of high-skilled labour migration. Firstly, it argues that global governance in this area is predominantly characterized by unilateralism and bilateralism, and that the institutional framework that exists at the multilateral level (in the form of the WTO's GATS Mode 4 and the Global Forum on Migration and Development) is a ‘facilitative’ form of multilateralism. Secondly, it explains the predominance of this level of governance by drawing upon global public goods theory to argue that, unlike many other areas of migration, the costs and benefits of high-skilled labour migration are largely confined to the sending state, the receiving state, and the migrant. Rather than being conceived as a global public good, the governance of high-skilled migration is likely to be a private good, implying that one would expect unilateralism and bilateralism rather than multilateralism. Thirdly, it argues that, on a normative level, an efficiency case cannot be used to support binding multilateralism but might support the development of facilitative multilateralism to improve bilateral partnerships.

As this chapter emphasizes, personal incentives are stacked in favor of emigration in many of the African countries that have outflows of skilled labor. The discussion provides some remarks on the question of the brain drain, with particular reference to Africa and using Ghana as a case study of effects on individuals. It fails to find any negative effect of brain drain on the stock of skills remaining in the source country, suggesting that skill-creation incentives offset the loss of skills one for one. It concludes that the ability of some people in the country to go abroad and form part of the brain drain (and circulation) has had a net positive effect on individuals from the source country.

The role migrant workers play in reconciling supply and demand of skilled labour in the UK construction industry is scrutinized in this chapter. Given the idiosyncratic, project‐based nature of the sector, characterized by the reliance on a mobile, itinerant, and largely self‐employed workforce, it is argued that mismatches between supply and demand of skilled workers remain inevitable. Shortcomings in the institutional framework governing skills reproduction in the sector contribute further to this widening chasm. Policy intent of managing just the numerical aspects of supply and demand of skilled labour remains wholly inadequate. Recommendations are therefore made for tighter labour market regulation to ensure equal and fair treatment of workers, development of a comprehensive vocational education and training (VET) system, and a paradigm shift away from current modes of skills reproduction and employment practices towards more sophisticated deployment and development of skills for all workers.

Although it is a given that all of the services in the world's largest knowledge-based economy (KBE) need managers and leaders, there is still a need for janitors, fast food service crews, and other such workers. This chapter reviews the evidence for the claims of policy-makers on the shift to a KBE. The evidence presented by the policy-makers, particularly in the United States and in the UK, is examined through the interpretation of available occupational data by these policy-makers and through the author's own interpretation. The notion of scaling down the size of the proportion of knowledge workers is also evaluated, as are the implications for a dramatic increase in graduates brought about by the demand of KBE for high-skilled and high value-added labour.

This chapter examines why Britain managed, for about a century, to generate and diffuse superior production techniques at a faster rate than the Continent, and to serve as a model that all European nations wished to emulate; and how and why it eventually lost its leadership and technology. It observes that technological success depended on both the presence of positive elements and on the absence of negative ones. The chapter notes that the generation of technological ideas and the ability to implement them are among the positive factors that provide technological successes. It further observes that one crucial difference between Britain and the Continent that helped Britain to establish its head start was its endowment of skilled labor at the onset of the Industrial Revolution.

This chapter presents conclusions to Part I, covering Chapters 1–5. The development of modern economies is certainly accompanied by an increasing division of labour and an increasing use of machinery, but these do not necessarily lead to reductions in the levels of skill required from their workforces. Such a consequence should not simply be taken for granted, and indeed the preceding studies of occupations involved in the British shipbuilding industry have indicated that it would be a highly questionable conclusion to reach. For, not only do these observations of the content of jobs and the composition of the workforce indicate a marked stability in levels of skill, but they also indicate that this was not just an aberration, perhaps the result of the resistance of well-organised labour, the unusual customer-specificity of the products, or even a managerial preference for self-regulating workers.

This chapter examines the role of employers in the demand for skilled labour. It first considers the factors underlying the demand for skill and proceeds by using a simple model of how firms behave in a competitive and known environment to show how the relative wage increases as the demand for high-skilled labour — relative to low-skilled labour — decreases. It then describes extensions to this model, including the introduction of realistic complications such as imperfect competition without altering the underlying rational actor assumption about employers. It also explains how the skills demand is changing in the modern era before concluding with a review of evidence linking skills and skilled work to employers' economic performance.

This chapter discusses the events during the times of crisis up to those leading to World War II. During 1939, the nation moved toward a war footing, but the preparations were not as rapid as they might have been. The government still greatly desired peace, in part because the military had to reorient its thinking, and in part because it was taking time to convert the economy to wartime production. There had been steps in this direction before 1939, but now the pace accelerated. So long as there as a shred of a possibility for peace, Britain would continue to negotiate, but at the same time the country had to step up preparations for the eventuality of war. Besides the usual bottlenecks of insufficient skilled labour and a lack of industrial capacity, the trade balance continued to widen as exports declined and the need for imports increased.

The industrial revolution is believed to have destroyed older, more benign, working patterns in Britain. In his book Condition of the Working Class in England, Friedrich Engels offers an unflattering account of the factory system created by industrialization, citing the ill health, physical deformities, and accidents suffered by workers, combined with the oppressive discipline imposed on them. This chapter, which examines the labor conditions of working men in Britain during the industrial revolution by analyzing the autobiographies written by some of them, begins by looking at skilled labor that included carpenters, shoemakers, butchers, blacksmiths, and other artisans. It considers their wages and their material well-being, along with their employment patterns, and also discusses the expansion in unskilled labor, particularly in the cottage industry.

This chapter investigates the changing international trade patterns and their effect on factor intensities in Japan, mainly focusing on the manufacturing sector. The factor content analysis showed that Japan's factor content net exports of capital and nonproduction labor have grown rapidly, while net exports of production workers have fallen by a large amount. The findings also indicate that specialization in the export of skilled labor-intensive products may have partly contributed to the increase in the relative demand for skilled labor within industry.

This chapter investigates the impact of internal migration on child labour outcomes in Brazil. In our model, migration impacts child labour through changes in the local labour market, which is made up of both adults and children. We exploit variation in the concentration of both skilled and unskilled immigrants at the municipality level and employ an IV strategy that relies on the historical (1980) distribution of immigrants within the country. Our results show that internal migration of a given skill level has a negative impact on corresponding adults’ labour market outcomes. We also find that unskilled (skilled) immigration has a negative (positive) and significant impact on child labour. Finally, unskilled immigration increases children’s school attendance and decreases their likelihood of being idle.

Industrialization and democratization were historically intimately linked in today's advanced democracies. The forging of this linkage marks the beginning of the symbiotic relationship between democracy and capitalism, which is the focus of this book. This chapter seeks to explain how this came about. Although the mechanisms are different across countries, it argues that the creation of a large skilled labor force was hard to build up and sustain without the formation of democratic institutions. The two are strategic complements in the sense that it is very costly to suppress for long periods of time a highly skilled workforce with strong collective action capacity demanding democracy; and democracy can serve as an effective institutional wrecking ball to break opposition among traditional elites to widespread education and to guarantee continued investment in education.

Knowledge has emerged as the critical factor to generate economic growth, jobs, and competitiveness in a globalized economy. However, science, research, and human capital do not do the taxpayers much good if these investments in new knowledge are not translated into jobs and growth. There is no shortage of educated, scientific, and engineering, as well as creative and dedicated people. But the product of all of this is that their new ideas and insights are not always picked up by the great large companies. The reason is what scholars have only recently termed as, The Knowledge Filter. It is the knowledge filter that stands between investment in research and science, but also more generally knowledge and ideas on the one hand, and their commercialization through innovation, leading ultimately to economic growth, on the other. It is the knowledge filter that impedes the spillover of knowledge and ideas from actually becoming commercialized into innovations that become the basis for economic growth.

The field of international trade developed in the modern era, largely as a study of trade in goods. Although it had many antecedents, an industrial-organization approach to trade was developed in the 1980s. This approach incorporated elements of imperfect competition, increasing returns to scale, and product differentiation into general equilibrium trade models. Yet this new theory, however welcome, was largely disjoint from the study of multinational corporations (MNCs). This chapter uses foreign affiliate production data to consider sales to the host-country market and export sales. It first generates separate predictions of how local sales versus export sales should be related to parent-country and host-country characteristics. It then outlines the knowledge-capital model of the MNC. It shows that local (host country) market size is more important for production for local sales than for production for export sales. Host-country skilled labor scarcity is important for export production relative to production for local sales. Investment and trade-cost barriers in the host country affect production for export more negatively than they do production for local sales.

Chapter 5 argues that work makes us vulnerable to those whose labor is presupposed by ours. The hierarchical division between high- and low-skilled labor, justified by ideas of personal achievement and rights as boundaries, denies this vulnerability by making invisible both the full value of “low-skilled” work and the value of labor that, because it requires the combination of qualitatively different skills, can only be created cooperatively. The division between high- and low-skilled labor enables the accumulation of capital by obscuring this value and the interest of the vast majority of workers in having this value recognized rather than transferred to capital. The notion of commitment is critical in undermining these ideas, showing how a common interest can arise out of different positions in the structure of work, and making visible workers’ shared interest in limiting returns on capital and increasing returns on labor.

This chapter examines how skilled and unskilled labor vary across countries by taking into account the wage rate for skilled labor and the wage rate for unskilled labor, based on the assumption that labor markets approximate conditions of perfect competition. The equation to be used implies that the relative wage of a skilled worker is decreasing with the relative supply of skills. However, for a given supply of skills the relative wage also depends on the relative efficiency with which skills are used. The chapter first estimates the skill bias, the relative supply of skills, and the skill premium before deriving a calibrated value for the elasticity of substitution. It then presents the key empirical results for the skill bias in technology across countries and goes on to discuss alternative skill thresholds. It also considers the implications of differences in school quality and the implications of capital–skill complementarity.

This chapter presents an endogenous technology framework capable of rationalizing the finding that technology differences are biased toward skilled labor, reproducible capital, and labor. In this framework, firms in each country choose a technology characterized by a particular combination of efficiency units attached to different inputs. The optimal choice of technology depends on relative factor prices and, therefore, on relative factor supplies. The chapter first develops the analysis for a production function with only skilled and unskilled labor before extending the model to feature the four factors of production used in the empirical framework. The two-factor model establishes the conditions under which the intuition that countries will choose technologies that augment the abundant factor is valid. It shows that the key parameter is the elasticity of substitution between the two factors of production.