Topic 12- Supply side policies Flashcards
1
Q
Supply side policies
A
Policies aimed at improving the supply side of the economy by increasing competitiveness, productivity and incentives.
2
Q
Labour-market policies
A
- Improvements in human capital through education and training
- Reduction in trade union power
- Reduction in unemployment benefits
- Reduction in income tax rates
- Reduction in employment protection legislations
3
Q
Product-market policies
A
- Privatisation : increasing competition>^productivity& efficiency
- Promotion of new/small firms
4
Q
Capital-market policies
A
- Reduction in corporation tax rates
- Deregulation of financial markets
5
Q
New modern supply side policies
A
- Nordic childcare schemes: Involve large state subsidies towards pre-school nursery care> estimated 1mil more women likely to be in workforce
- Reduced incentive to remain unemployed: Employment and support Allowance (which has replaced disability benefits) may only be claimed after a person has been assessed to determine their capability of working. (many of those who previously claimed benefits can no longer)
- Focused immigrant policy: Incentives for individuals with skills to come to the country. Reduction in net migration> decrease in supply
- Increased retirement age: This increased the size of the labour force and increased productivity as those who had experience were skilled continued.
6
Q
Criticisms of supply side policy:
- Inequality
- Exploitation
- Ineffectiveness
- Market failure
- Time lags
A
- Increased inequality: cuts in corporation and income tax is likely to increase inequality as the rich will become richer. Cuts in unemployment benefits>Poor get poorer
- Exploitation:A reduction in trade unions and employment protection rights> exploitation
- Market failure: Deregulation of financial markets>failure
- Supply side policies take considerable long before they have an effect e.g improvements in education=5 yrs to influence productivity
