Factor Immobility

Question 1

Occupational immobility

Answer 1

Occupational immobility occurs when there are barriers to the mobility of factors of production between different sectors of the economy leading to these factors remaining unemployed, or being used in ways that are not efficient.

Some capital inputs are occupationally mobile - a computer can be put to use in many different industries. Commercial buildings are occupational mobile: shops and offices can be altered to provide a base for many businesses. However, some units of capital are specific to the industry they have been designed for - a printing press or a nuclear power station for example.

Question 2

Occupational immobility

Answer 2

People often experience occupational immobility. For example, workers made redundant in the steel industry or in heavy engineering may find it difficult to find a new job. They may have specific skills that are not necessarily needed in growing industries which causes a mismatch between the skills on offer from the unemployed and those required by employers looking for workers. This is called structural unemployment and is a clear waste of scarce resources and represents marginal failure.

Question 3

Geographical Immobility

Answer 3

Geographical immobility refers to the barriers people moving from one area to another to find work. There are good reasons why geographical immobility might exist: family and social ties, financial costs, shortage of affordable housing, high rental costs, high general costs of living, migration controls, cultural and language barriers.

Question 4

Policies to improve occupational immobility

Answer 4

1. Invest in training schemes for the unemployed to boost their human capital to equip them with new skills and skills that can be transferred from one occupation to another.
2. Subsidise the provision of vocational training by private sector firms to raise the skill levels

Question 5

Policies to improve the geographical immobility

Answer 5

1. Reforms to the housing market designed to improve the supply and reduce the price of rented properties to increase the supply of affordable properties
2. Specific subsidies for people moving into areas where there are shortages of labour - for example teachers and workers in Health Services