Edexcel Economics Theme 2 Essay Plans

Question 1

With reference to Figure 1, discuss the use of GDP data as a means of comparing living standards among the five EAC member countries. (12)

Answer 1

p1: Internationally comparable measure, fairly simple measure, low opportunity to govts of developing countries. less data required than some other measures, reduces chances of inaccuracy. H - doesn’t include much of whats important in determining standard of living, e.g education, healthcare. Also doesn’t take into account different costs of living (w/o PPP adjustment).

p2: gdp data present for all five countries, whereas no ihdi data fo burundi eg. Can be refined into PPP measures to make it more representative. H- doesn’t take illegal work into account, particularly a problem in developing countries like these.

Question 2

With reference to Figure 3 and Extract 1, assess the likely effects of rising immigration for employment and unemployment in the UK.

Answer 2

Increased size of population means that there is an increase in supply of labour, thus reducing wage rate and increasing demand for labour, so employment rises, 41% of people have immigrated for work and this is likely to lead to an increase in employment - these 228,000 immigrants may fill those vacancies that cannot be filled by indigenous workers. Increased consumer spending from an increased population means more jobs are created. H - depends on skills of immigrants.

Increased immigration means more people looking for work so likely to increase unemployment - 41% of immigrants looking for work, hence could displace current employees. Surplus labour in the market, e.g. family (15%), might attempt to join the labour market but with inappropriate skills. H - Different sectors of the economy may be affected differently.

Question 3

Evaluate government policies that could be used to increase the employment rate in the UK.

Answer 3

Government policies are either fiscal or supply side policy.
Employment rate - measure of the extent to which available labour resources are used.
p1: Investment in education and training to provide a more skilled workforce through increases in the level of human capital. Reduction in minimum wage to encourage more firms to increase employment levels
Reduction in unemployment and associated benefits to increase incentive to find work Grants/tax breaks to firms encourage increases in employment Reduction in taxation to encourage firms to expand or set up in UK, therefore increasing employment. Shifts Ad right. H - time lag (education takes a long time)

p2: Reduction in income tax creating a larger incentive to work, increasing consumption and therefore, employment Decreasing the power of trade unions will help reduce real wage unemployment. Improving geographical mobility of labour - government providing tax breaks to firms who set up in depressed areas/giving some financial assistance to unemployed workers who move to areas with high employment. Government improving the labour market flexibility by making it easier to hire and fire workers may encourage more job creation. Increase provision of free childcare. H - this policy change may not change all that much.