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Cuba's experiment depended on its authoritarian state, which commanded the "reallocation" of labor from cities to farms.
This requires some reallocation of labor, with only 40 million workers now producing hot dogs, 80 million producing buns.
The European Central Bank has criticized short-time work as interrupting the normal reallocation of labor to more profitable industries as a recovery emerges.
A number of economists, however, argue that Japan needs more deflation as a form of shock therapy: fewer debts, greater efficiency and a reallocation of labor, they say, is precisely the bitter medicine the economy must swallow.
Catch-up, which entailed capital formation, the reallocation of labor, and the efficient use of these factors of production, required Europe to mobilize savings, finance investment, and maintain wages consistent with full employment and respectable profit rates.
The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity ("A" or Total Factor Productivity) to rich countries offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places.
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For example, while Acosta (2011) does find that remittances are associated with a decrease in wage labor, he also finds that remittances tend to increase the prevalence of domestic labor, suggesting that remittances simply lead to a reallocation of child labor from paid to unpaid work.
Otherwise, the time savings allow the reallocation of family labor to other on-farm production activities, off-farm employment, and leisure, which are high-value activities.
Similar to the mechanism studied in previous literature on immigration and task specialization (D'Amuri and Peri [15]; Peri and Sparber [33]), immigration will cause a reallocation of native labor supply toward standard schedules, which will partially compensate for the depressing effect of immigration on nonstandard wages.
It can also explain why there is less reallocation of capital and labor from low productivity to high productivity firms in India, since otherwise-successful firms find it harder to grow.
Estimating the contribution of labor reallocation to productivity growth: a Canada-US comparison.
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