5.3 Wage Determination Flashcards
What is the equilibrium wage rate?
Intersection of the supply and demand for labour
Causes of wage differentials between occupations?
- Compensating wages
- Different skills
- Trade unions
- Differences in productivity
What is the Gig economy?
Sector with fragmented work characterised short-term contracts and freelance work
How big is the UK Gig economy?
4% of working population
Benefits from the Gig economy?
- Flexibility
- Autonomy
- Reduced fixed costs
Drawbacks from the Gig economy?
- Lack of employment rights
- Lack of investment
- Shrinking tax base
Ageing Population Statistics
- 20% pension age
- 10% older than 75
Effects of an ageing population?
- Changing patterns of demand
- Impact on housing market
- Impact of labour market
Effects of robotics & AI?
- Impact on productivity
- Impact on labour market
- Consumer welfare
Effects of a fall in net labour migration?
- Shortages of skilled labour
- Impact on housing market
- Effect on dynamic efficiency
- Brain drain
Effects of trade unions?
- Use of collective bargaining
- Most belong to the Trade Union Congress
- 6 million people
- Promote employment rights
Benefits of zero-hour contracts?
1) Flexibility for businesses
2) Flexibility for employees
Drawbacks of zero-hour contracts?
1) Underemployment
2) Uncertain incomes
Causes of the gender pay gap?
- Breaks from the market
- Access to education
- Discrimination
Govt policies to improve the labour market?
1) Providing access to better training
(e.g. Workplace Levy)
2) Providing childcare
3) Raising NMW
4) Improve transportation
5) Solve housing shortages
Arguments for maximum wages?
1) Equity
2) Remove short-termism of bonus culture
3) Reduce inequalities in income and wealth
Arguments against maximum wages?
1) Prevent influx of talent
2) Lead to a business relocating overseas
3) Depends on industry
