Labour Market 4 Flashcards
Causes of labour market failure
Labour immobility
Disincentives to find work
Discrimination
Monopsony power of employers
Policies to reduce occupational mobility
Training and education
Expansion of apprenticeship / internship programmes
Policies to improve geographical mobility
Rise in house building (reduce property prices)
Regional policing to create new jobs and businesses
Policies to stimulate stronger work incentives
- Higher minimum wage of a living wage
- Reductions in income tax / national insurance
- welfare reforms
What is a minimum wage
A statutory pay floor that cannot be undercut
What is the national minimum wage not the same as
The living wage
Who puts forward the living wage
The Living Wage Foundation
What does a standard minimum wage diagram suggest
A pay floor will lead to a contraction of employment. But this depends on the level at which the minimum wage is set.
What happens if labour is inelastic following a minimum wage
A higher minimum wage will cause only a limited contraction on the level of labour demand
Arguments for a higher minimum wage
- equity
- poverty reduction
- training
- incentives
- anti-discrimination
Arguments against a higher against s rise in the minimum wage
- unemployment (costs)
- small businesses suffer
- training
- competitiveness
- inflation
Alternatives to a higher national minimum wage
Living wage
Income tax reforms
Benefit reforms
Measured to raise labour productivity
Arguments for executive pay ceilings
- equity and fairness
- link between executive pay and performance is hard to discern
- huge levels of executive pay contribute to growing income and wealth inequality
- bonus vulture encourages SR
Arguments against executive pay ceilings
- brain drain
- businesses re-locate
- rewarding executives in other ways
- higher marginal tax rates on top executive pay
- low pay only in certain industries
