Labour

Question 1

what is a trade union

Answer 1

trade union is an organisation of workers of a particular industry that collectively bargain to improve wage and non-wage working conditions to protect workers

Question 2

Diagram for trade union in normal market

Answer 2

Question 3

Positive of trade unions

Answer 3

Question 4

Negative of trade union

Answer 4

Question 5

second Negative of trade unions

Answer 5

Question 6

Evaluation points for trade union

Answer 6

Regulation needed to prevent abuse of union power?
Impact of union strength determined by union density
Changes in structure of economy

Question 7

Examples of legislation on trade unions

Answer 7

Thatcher in 1980 made closed trade unions illegal
As well as strike regulation:
Legal only if a certain % agree on when voting in secret
Only allowed to strike against their own employer limiting power of trade unions

Question 8

Reasons for wage differentials
(regional variances in wages)

Answer 8

Occupational and Geographical immobility in the north to south

Restructuring of the UK economy, specialisation. Service jobs in south, manufacturing in north. MRPs lower in north

Question 9

Reasons for wage differentials (ethnic group variances)

Answer 9

Minority groups on average have poor educations so low MRPs, employment prospects are low, less power to bargain for higher wages. Earning potential lower.

Lack of language proficiency, employability is low. Access to higher earning jobs is lower.

Question 10

Advantage of wage differentials

Answer 10

Promotes incentives for lower earners to work harder or pursue skills training to be more productive, increase their MRPs to access high paid jobs.

Higher income earners often benefit lower income earners through the trickle down effect

Question 11

Disadvantages of Wage differentials

Answer 11

Income inequality created. Poverty, lower living standards, more welfare benefits which puts strain on government finance. Can restrict growth and social problems like crime.

Trickle down effect may not occur

Question 12

Income and Wealth are mutually reinforcing

Question 13

Reasons for differentials in income and wealth

Answer 13

Age (earning potential)
Education differences
Wage differentials

Question 14

2 measures of income inequality

Answer 14

Lorenz curve (Visual indicator)
Gini coefficient (mathematical indicator)

Question 15

Diagram of NMW on monopsony market

Answer 15

increases employment and wages to competitive levels improving efficiency of labour markets

Question 16

Ways to solve wage differentials and inequality and reduce poverty

Answer 16

Max price
Min Price
Transfer payments
Governments adjust tax system
Gov spending on essential goods

Question 17

increasing tax for higher earners

Answer 17

Raise top tax band currently at 45%
Reduce gap
But up to a certain point shown by laffer curve
Emigration of skilled workers out of country due to high tax
creates a productivity gap

Question 18

Laffer curve

Answer 18

Shows that once a certain point is reached if people are taxed more then this will disincentivise them to work, negative income effect where they now work less and earn less to reach a target income. Reduces tax revenue for gov

Question 19

Max price

Answer 19

Caps incomes of higher earners
Prevents exorbitant salaries or pay rises for the rich that would otherwise widen inequality gap
Helps to alleviate cost burdens on firms

Question 20

Max price and min price negative effect

Answer 20

Distorts the efficiency of labour market outcomes

Question 21

Min price

Answer 21

Price floor above equilibrium set at equitable levels
Directly boosts poor incomes

Question 22

Negative of min price

Answer 22

Unemployment
Real wage unemployment
Harms those it’s supposed to protect
Only those with high MRPs will be hired
Poorer people have less skills so cannot get jobs
Worsens inequality gap

Question 23

National minimum wage will be imposed when…

Answer 23

Governments feel that wages in a competitive labour market are not high enough for workers to sustain a satisfactory standard of living

Question 24

Pros of NMW

Answer 24

Powerful weapon to fight against a monopsonist employer
Reduce economic inactivity
Increase in Fiscal intake for the gov

Question 25

Increase in fiscal intake means

Answer 25

If incomes rise then government will collect more in tax revenue
Reduces strain on gov finances
Allows government to deleverage debts
Allows to fund spending on public services which can further help poverty like education

Question 26

Cons of NMW

Answer 26

Unemployment
Unintended consequences
Regional differences in pay that aren’t accounted for by NMW