issues with the labour market Flashcards
Occupational immobility
-When workers lack skills.
-Misatch between skills demanded by firms and skills supplied by existing workforce
Why does occupational immobility occur?
-Workers overspecialised so lack transferable skills
-e.g coal miners deindustrialised in Britain
-Length of time and cost of retraining
-e.g. retraining to become a nurse takes 3 years - opportunity cost also from not earning a wage
-imperfect info about where best job prospects can be found
Geograohic immobolity
- workers unable to move between geographical areas
What causes geographical immobility?
-High costs for commuting restrict aailable jobs
-House price differentials- more expensive in the south
Gig economy
-Segment of labour market focusing on short-term, temporary, zero hour contracts
-self-employment
-zero-hour contracts
-more than one source of income
STATS
-5 million self-employed in UK - 45% rise since 2000
Factors behind growth of gig economy
-Decline in traditional maufacturing jobs-were conductive to stable, full time work- servcie sector has more flexible/part-time work
-Technology - internet allows many people to work from home or be self-employed - online project managers - eBay, Etsy
-Shift in economy - rise in online shopping and home deliveres - delivery drivers
In work poverty - gig economy
-Boom in job creation
-jobless rate 4.4%
-However not enough to raise living standards
Inward immigration
arguments for restricting
-increased supply decreases wages
-gov burden due to increased spending on housing, benefits, healthcare
-may be exploited
arguments aginst
-helps firms in areas where there is a shortage
-tax contributions outweigh increased costs to gov for education and housing
-brings skills to increase ppf and lras - productive capacity increases
How does discrimination lead to labour market failure
- result of info failure
-human-resources under-utilised, slow trend growth
-lack of diversity hampers innovation
policies to correcct occupational immobility
-Apprenticeship Levy - help companies offer more apprenticehip an correct skill gaps - 0.5% tax on firms whos payroll exceeds £3m
-T levels - technical based qualifications, more rigorous to Btecs - more meaningful accreditation- mix of classroom and on the job experience - 1800 hours over 2 years
-Policies to increase labour market flexibility - easy to change jobs and hire and workers - temporary contacts
-cheaper housing
-training subsidisation
-encourage immigration
-childcare support
minimum wage
-£11.44
-legal minimum set by gov
-increase incomesof lowest paid and reduce relative poverty
-low pay has increased because there is lower demand for unskilled labour and growth in part-time work
DIAGRAM
-Contraction in demand
-increases firms COP
-extension in spply as people are more incentivised to work
-excess supply=unemployment
problems with minimum wage
-Real-wage unemployment due to decreased demand from increased costs of FOP
-Black market work - firms avoid declaring wages - cash-in-hand - labour is exploited
-Regional variations in wage - prices differ
-Inflationary - firms increase prices and pass them onto consumers(cost-push) - real wages do not increase
Benefits of NMW
-Reduces relative poverty
-Effects on employment are negligible
-Increase productivity - incentivised to work harder
-Increased incentives for firms to invest to increase labour productivity as costs are higher
-Knock-on effect - firms increases wages of those just above minimum wage to maintain pay premium
-Prevent exploitation and monopsony power
evaluation of minimum wage
-only directly benefits 7%
-could encourage trade union membership
-increase occupational labour mobolity - vocational training
