Developing resilience through labour mobility in microstates

Abstract

This chapter views freer mobility of labour between small states and the rest of the world as a major tool for macroeconomic stabilisation in the former. It is shown that while small states are far more exposed than larger states to the vagaries of the international market place, they often lack the capability to effectively use the conventional tools for demand management. International labour mobility, therefore, is critical for microstates to minimise volatility in unemployment. Economic policy has an important role in facilitating labour mobility by improving skills and providing information. This is viewed as an essential component of building resilience in microstates.