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Capital Mobility vs. Labor Mobility:Theory and Implications

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  • Garrison Hongyu Song

    (Department of Business Management, SUNY at Farmingdale, Farmingdale, New York, United States.)

Abstract

A random search-based model is proposed to study the impact of the relative mobility of capital with respect to labor on income inequality and financial globalization for the first time. Our simulation results indicate that capital is less mobile than labor domestically. Our simulation results further suggest the duality of capital mobility in financial globalization, in which more mobile capital may not always promote financial globalization. Lastly, our simulation results show that the share of labor income in the gross proceeds is negatively related to the relative mobility of capital, the separating rate between capital and labor, and the bargaining power of capital, which may shed light on income inequality in the U.S.

Suggested Citation

  • Garrison Hongyu Song, 2022. "Capital Mobility vs. Labor Mobility:Theory and Implications," International Journal of Economics and Financial Issues, Econjournals, vol. 12(4), pages 47-55, July.
    • Handle: RePEc:eco:journ1:2022-04-7
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    More about this item

    Keywords

    Capital Mobility; Labor Mobility; Income Inequality; Financial Globalization; Bargaining; Random Search;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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