labour market Flashcards

1
Q

Define wage differential

A

The difference in pay for two workers for having the same job

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2
Q

When did the UK begin moving from the manufacturing sector to financial services

A

1970s

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3
Q

Explain a chain of analysis on why a rise in demand for service labour causes a wage differential in the north vs south

A

North - primarily focused on manufacturing jobs that have fallen in demand
- this would lower incomes, lower consumption, lower profits of businesses who would shred workers or shut down. leading to further fall in income as labour is a derived demand

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4
Q

Why may workers from the north not be able to move to the south

A

Due to occupational and geographical immobility

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5
Q

list 4 arguments for ceo price cap

A
  • equity and fairness
  • hard to discern pay related to performance
  • bonus culture means CEO’s make ST decisions instead of LT decisions for higher annual revenue
  • increase levels of poverty and inequality
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6
Q

list 5 arguments against CEO pay cap

A
  • prevents attraction of talented CEOs to the UK
  • capital flight to countries with low tax and no cap
  • firms may rewards CEO by other methods like complex share options
  • may be better policies like progressive tax
    -uniform vs non-uniform cap affects different industries
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7
Q

list 7 benefits of NMW

A
  • fall in poverty and inequality (less exploitation) - reduces wage differentials
  • increase incentive to work (fall in inactivity rates)
  • fiscal surplus for government
  • increase MRPL
  • incentive for firms to boost human capital
  • counters monopsonist employers
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8
Q

list 6 cons to NMW

A
  • real wage unemployment (excess supply)
  • youth lose out most (unable to justify pay increase therefore LT lead to hysterisis
  • Those not affected would want pay increase, they want wage differential
  • cost to business (may shut down)
  • regional differences (london needs higher pay)
  • monopsonist employers like government over public sector increase in spending
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9
Q

EV the impact of TU

A
  • depends on market structure if there is presence of monopsony
  • depends on trade union density
  • depends on TU mark up
  • real evidence to show TU power is limited (e.g closed shop TU are banned, legislation, more part time workers,)
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10
Q
A
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