Mobility barriers refer to inhibiting factors that prevent workers, capital, or companies from moving from one location or position to another location or position.
For companies, barriers restrict companies from moving between strategic groups, between market segments, or to enter and exit markets. Companies cannot move from one strategic group in one industry to another for some reasons, including investment costs, the nature of the market, and the company’s internal capacity.
Barriers to labor mobility
Barriers to mobility restrict workers from moving between companies, different jobs, different domestic areas, or even between countries.
When they move, there are several risks that they need to bear, including salary, seniority, retirement rights, and a supportive work environment.
When they move geographically, they also face problems related to housing, transportation, immigration control, language and cultural differences, and recognition of their qualifications. For the latter, workers may have received professional certification, but that applies only domestically, not abroad. Thus, when working abroad, the certification is no longer an acknowledgment of their expertise.
Barriers to capital mobility
Capital mobility is vital in driving up economic growth. When capital moves freely, it allows its most valuable use.
Capital mobility allows companies or countries to access global savings with lower interest rates. Of course, low interest makes investment costs and increases production capacity cheaper.
But often, capital flows are hampered by several controls that the government enforces. Among these controls are certain transaction taxes, duration of the flow, nominal of investments, foreign exchange controls, and ownership controls.
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