Labour Market Flashcards
1
Q
Name 2 Pros of a Monopsony Labour Market
A
- Revenue Maximisation as they hire up to when MRPL=MCL
- Alongside a Trade Union, this can be beneficial (higher wages and higher quantities)
2
Q
Name 2 Cons of a Monopsony Labour Market
A
- There will be lower wages and lower employment in Monopsony markets
- Workers’ wages are lower than their MRPL, which is really harmful to them
- This market structure distorts efficiency
3
Q
What are some of the Evaluation points for a Monopsony Labour Market?
A
- The magnitude of Monopsony Power, which can be calculated by looking at MRPL and wage rate and subtracting
- The sector in which the Labour market is in
- Trade Union influence
- The Government are actually a monopsony of some sectors - Teaching, NHS. They can’t act against themselves
4
Q
Name 2 Pros of a Trade Union within a Labour Market
A
- Fights for workers’ rights- higher wages and better working conditions
- The use of collective bargaining means that they are more likely to make change
- Should bring about higher wages
- Can combat Monopsony employers
5
Q
Name 2 Cons of a Trade Union within a Labour Market
A
- Employment drops due to higher wages, which leads to standard of living and Government finance issues
- If the good had a high inelasticity of demand, trade unions can be too powerful, where strikes can harm the productive capacity of a nation
6
Q
What are some of the Evaluation points for a Trade Union within a Labour Market?
A
- Is the Trade Union paired with a Monopsony (Bilateral Monopoly)
- The strength of the TU and the Union Densities, how distorted is the market?
- The PED of the good/ service produced
- Union Mark-up can show how successful the TU is
- TU powers have diminished since the 1970s and Thatcher, due to Legislation
- Restructuring of the UK economy, away from manufacturing
- Many employers make it challenging to organise a strike
- Globalisation has increased the pool of workers, SoL, thus they don’t have the same bargaining power
7
Q
Name 2 Pros of the National Minimum Wage
A
- Reducing Poverty and Income Inequality
- Increases the incentive to work, and will reduce the ‘unemployment trap’ and ‘voluntary unemployment’
- Fiscal dividends to the Government, fewer benefits spending and more tax revenue
- Increased productivity due to a morale boost
- Incentive to increase human capital as people are ‘more expensive’ to hire
- Can counter a monopsony employer
8
Q
Name 2 Cons of the National Minimum Wage
A
- Unemployment- ‘Real Wage unemployment’ as it is more expensive to hire workers
- Youth lose out the most, they have a lower MRPL thus they are laid off- Long-Term unemployment like Spain
- High earners may ask for higher wages, increased costs and inflation
- Cost to Businesses- higher prices and less international competitiveness
- Public Sector pay would rise, increasing costs to Government
9
Q
What are some of the Evaluation points for a National Minimum Wage?
A
- The PEDL and PESL
- Level that the NMW
- Unemployment rate Vs Inflation rate, which is less favourable to increase
- Money saved can be spent on training courses or subsidising firms for employment
10
Q
Name 2 Pros of Wage Differentials
A
- Promotes incentives to work harder or gain skills and qualifications
- Boosts in Productivity, Enterprise and MRPL, reducing costs for firms and increasing the productive capacity of the UK
- Trickle-Down Economics- could create a multiplier, job creations, ART and MRT increases- redistribution
- Encourages getting a job and reduced the ‘unemployment trap’
- Can promote good allocation of resources, and pay higher where economies are more productive
11
Q
Name 2 Cons of Wage Differentials
A
- Income Inequality will widen. Lower standards of living
- Strained Government finances
- Harms Long-Run growth due to MPC dropping
- Social costs causing Negative Externalities
- Trickle- Down effect historically does not work
- Monopsony employers can harm wage differentials, which is often the Government’s doing
- Risks of Government Failure
12
Q
What are some of the Evaluation points for Wage Differentials?
A
- The Cause of the Wage Differentials
- How much inequality is there? Costs Vs Benefits
- Short-Run Vs Long-Run, could it get better or worse?
- Risk of Government Failure, distortion of incentives
