Labour Market - Govt Intervention in Labour Markets

Question 1

What is a minimum wage in the labour market

Answer 1

A legally-enforced wage floor in the labour market

Question 2

Advantages of minimum wage

Answer 2

Efficiency wages:
-morale and labour productivity could improve

Encouraging workforce participation:
-incentivises more people to remain/join the workforce

Reduction in poverty

Reduced reliance on state welfare

Question 3

Disadvantages of minimum wage

Answer 3

Job Losses:
-due to increase in production costs
-unemployment (excess supply)

Higher prices:
-to offload an increase in costs

Smaller businesses struggle to adjust to higher costs

Reduction in dynamic efficiency

Question 4

Policies to reduce labour market immobility

Answer 4

Anti-discrimination laws and regulations:
-Equality Act 2010

Affirmative Action/diversity initiatives:
-increase representation of under-represented groups in the workforce

Access to high quality education and training:
-investment in apprenticeship programmes
-university grants and scholarships to poorer students