Labour market participation refers to people of working age who are economically active i.e. either in work or actively looking for work. These policies could create an incentive for the economically inactive to join the labour market. 1. Increase the Minimum wage This increases the benefits of working and increases the incentive to join the …
Basics of Labour Markets Demand for Labour Supply of Labour Wage Determination Marginal revenue product of labour Labour market imperfections Monopsony diagram Labour Market Imperfections Monopsony Trades unions Geographical immobiliities Discrimination in the labour market Government intervention in labour markets Minimum wages Minimum wages Minimum Wages for 16-18 year olds Disadvantages of minimum wages Would …
Definition of Labour Force This is the number of people of working age who are employed or who are looking for employment. I.e. number employed plus the number unemployed Definition of Participation Rate This the ratio of the working age population to the number of employed. see Participation Rate Human Capital This refers to the …
Demand side policies include expansionary fiscal and monetary policies. For example, the govt could increase Govt spending and lower taxes. G is a component of AD, therefore, this will cause AD to increase, there may also be a multiplier effect causing AD to increase even more than the initial effect Lower tax rates will increase …
Fiscal Policy is the use of Government spending and taxation levels to influence the level of economic activity. In theory, fiscal policy can be used to prevent inflation and avoid recession. Fiscal Policy explained But, in practice, there are many limitations of using fiscal policy. Evaluation / Criticism of Fiscal Policy Disincentives of Tax Cuts. …
Should the government leave house prices to market forces, or actively intervene to prevent a house price crash? Arguments for intervention Falling House Prices Could cause a recession If house prices fall, it will cause significant problems for the UK economy. There will be a fall in consumer wealth, and declining house prices can lead …
Definition of trade creation Trade creation refers to the increase in economic welfare from joining a free trade area, such as a customs union. Trade creation will occur when there is a reduction in tariff barriers, leading to lower prices. This switch to lower cost producers will lead to an increase in consumer surplus and …
A Carbon tax is a specific tax on the consumption of goods which cause carbon dioxide emissions. C02 emissions have been identified as a major source of global warming and therefore, governments have been keen to reduce carbon emissions. Advantages of Carbon Taxes The market price is P1 – but this ignores the external cost …