labour markets

deliveroo

The gig economy

The gig economy refers to the segment of the labour market which concentrates on short-term / temporary jobs and contracts. Often these workers can have more than one job, e.g taxi driver who works both for a traditional taxi company and Uber. Like a musician who goes from one gig to the next, the gig economy refers to a growing range of workers who don’t have typical stable employment but work as self-employed and temporary contractors. The number of people who work for…

Minimum Wage for 16-18 Year olds

Minimum Wage for 16-18 Year olds

The minimum wage for workers aged 16-18 is £4.05 (April 2018-2019) For workers, aged 18-20 is currently £5.90 (April 2018/2019) Readers Question: What are the minimum wage rates for 16, 17 and 18-year-olds. Should the minimum wage be increased?  Should there be a minimum wage rate for children under 16? Minimum Wage Rates from April 2018 £7.83  –  25 and over £7.38 – Age 21-24 £5.90 – Age 18-20 £4.20 – Under 18 £3.70 – Apprentice rate. (An apprentice means the firm has to devote a certain time to training the…

Impact of increase in female labour market participation

Impact of increase in female labour market participation

A look at the economic impact of an increase in the supply of female workers in labour markets. In summary: Increased female labour market participation will lead to increase in supply of labour, and in theory, could lead to lower wages. However, a gradual increase in female labour market participation is often in response to rising demand for certain jobs, and is consistent with rising real wages. The increase in female labour market participation can also increase labour market flexibility and impact income distribution with society. History – Female labour market participation The…

uk-real-wages-07-17

Reasons for falling wages

Since the financial crisis, we have seen an unprecedented stagnation/decline in real wages. This decline has been most noticeable for low-income workers, with growing levels of inequality. The decline/stagnation in real wages is a global phenomenon – though some countries have been more affected than others. Reasons suggested for falling wages since 2008 include: Recession – causing unemployment and downward pressure on wages A decline in trade union membership. Increased labour market flexibility, such as more zero hour contracts, new gig economy and limited bargaining power…

Measures of Poverty

Measures of Poverty

Poverty implies low income and struggling to meet basic needs. There are two main types of poverty Absolute poverty – income below a certain threshold necessary to meet basic necessities of life (food, shelter, clothing, rent) Relative poverty – Individuals receiving income a certain level (e.g. 50%) below the median income of the general population. Definitions of absolute poverty do not change with economic growth. Usually, if average incomes rise, then more of the population should be lifted out of absolute poverty. However, if economic growth is unequal and high-income…

minimum-wage

Effect of minimum wage on economic growth, inflation and AD/AS

How does the minimum wage affect aggregate demand/aggregate supply and macroeconomic factors such as inflation, unemployment and economic growth? A minimum wage is the statutory minimum wage that employers can pay per hour. In 2017, the UK minimum wage was set at £7.50 an hour for workers over 25. Higher wages increase incomes and potentially cause higher consumer spending. However, there is a danger a minimum wage can cause higher unemployment, which would cause lower economic growth. Effect on economic growth If workers receive a pay increase, then there will be…

comparing-wages

Factors that explain wage inequality

A look at factors that explain wage inequality – including classical economic theory and labour market imperfections. Readers Question: Idealized free market theory argues that it is automatic for each worker to receive just what he or she is worth; otherwise, an “underpaid” worker could just look elsewhere to bid a higher salary.  Could established theories of the limitations of the free market – unfulfilled requirements and lack of competition – help explain wage inequality? Brief overview of wage inequality Classical theory of labour…

Participation Rate

Participation Rate

Definition of Participation Rate. The participation rate is the number of people working or actively seeking work as a % of the working population (16-65). The participation rate is similar to the concept of being ‘economically active’. If a person drops out of the labour market, they are considered economically inactive and no longer participating. Why People May Drop out of Labour…