Transitional Changes of Labor Migration under Knowledge Based Economies for EU Developed Countries

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Cheng-Ping Shih
Jasmine Lauren Brownm

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On facing the transitional change of developed countries for the last four decades, labor migration has become a serious issue under knowledge based economies. Human resources can easily cross the board but cannot transfer from one sector to different sectors without job training. The transition of structural change has great impact on labor migration and is one of the most important effects of modernization. The structure of developed countries transformed from labor intensive to capital intensive economies during the 1970’s to late 1980’s. At this stage, industrialization aimed at transforming the surplus labor force in order to resolve disguised unemployment and structural unemployment dilemmas. After the 1990’s, developed countries invested in Information Technology infrastructure on a large scale and have therefore experienced the knowledge based economies which caused serious structural unemployment for two decades. In order to understand the transition probability of labor migration across sectors, the Markov chain model is applied in this research. One stage and two stage methods were estimated and the empirical results show that the probability of laborers staying in the primary industry in highly industrialized countries is lower; secondly, the probability of workers moving from the primary and secondary sector to the tertiary sector is generally lower as a result of a low education level in the masses of rural laborers; thirdly, in the EU, the probability of laborers staying in the tertiary sector is above 98%; lastly, the Chi-square test shows that labor migration has significant impact on structure change in European developed countries.