MF- Factor Immobility

Question 1

What are the two main types of factor immobility

Answer 1

Geographical and occupational

Question 2

When does occupational immobility occur

Answer 2

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

Question 3

What capital inputs are occupationally mobile?

Answer 3

Such as computers- can be put to use in many different industries

Question 4

How do people experience occupational immobility

Answer 4

E.g. workers made redundant in the steel industry or in heavy engineering may find it difficult to find a new job. Mismatch of skills (structural unemployment) - waste of scarce resources and represents market failure

Question 5

What is geographical immobility

Answer 5

When barriers prevent people moving from one area to another to find more work

Question 6

Reasons why geographical immobility might exist:

Answer 6

• family and social ties
• financial costs of moving
• regional variations in house prices
• differences in cost of living
• high cost of renting
• migration controls (cap in inward migration)
• cultural and language barriers

Question 7

Policies to reduce occupational immobility

Answer 7

• invest in training schemes for the unemployed- transferable skills
• subsidise the provision of vocational training by private sector firms to raise the skills level

Question 8

Policies to reduce geographical immobility

Answer 8

• reforms to the housing market (improve supply and reduce price of rented properties and to increase supply of affordable properties)
• specific subsidies (for people moving into areas where there are shortages of labour)
• relaxation of migration caps