Government Intervention on Labour Markets

Question 1

Why does the government intervene within the labour markets & some examples?

Answer 1

They make deliberate attempts to increase the size of the labour force by moving individuals out of economic inactivity. E.g:
1. The work programme 2011
2. The fairness at work programme 1999
3. Job centre plus
4. Childcare reforms
(see folder for more info)

Question 2

Why else does the government intervene in labour markets and examples?

Answer 2

To help solve labour market failure.

1. Monopsony
2. Trade Union
3. Imperfect information (discrimination)
4. Skills shortages
5. Unemployment

Question 3

Policies to counteract a monopsony & evaluation?

Answer 3

1. Banish monopsonies
2. Trade unions = counter strength
3. Minimum wage - increase pay floor
4. Minimum wage creates unemployment
5. Trade unions = market failure

Question 4

Policies to counteract trade unions & evaluation?

Answer 4

1. Minimum wage - reduces need of them
2. Restrict power of union - no closed shops
3. Ban trade unions?
4. People part of a union - higher productivity - restrict union = lower productivity & demand for labour
5. Could take a long time / costly to ban every trade union - anger people - human rights

Question 5

Policies to counteract imperfect information & evaluation?

Answer 5

1. Advertising campaigns - promote groups
2. Legislation in place - equality act
3. Does the legislation work / enforced?
4. Costly to advertise - would that work?

Question 6

Policies to counteract skills shortages & evaluation?

Answer 6

1. Investment in eduction and training policies - corrects structural unemployment
2. Promote apprenticeships - subsidies etc
3. Takes a long time to show benefits
4. Costly
5. Hard to target key skills
6. Hard to implement

Question 7

Policies to counteract unemployment & evaluation?

Answer 7

1. Structural - re-educating and retraining
2. • Cyclical - improve AD
3. Frictional - make it easier to get a job
4. Wider economic effects of promoting these?