Category: Essentials of Economics: Ch 07
The UK and global labour markets are changing significantly. In the UK we have faced a level of immigration of around 500 – 600 thousand people (the government does not know the exact figure), while in the global economy the International Monetary Fund (IMF) has estimated in its latest World Economic Outlook that the global labour force has quadrupled in the last quarter of a century. So what is the impact on the UK labour market? Many assume that the effect is negative, but as is always the way with these things, you will find plenty of economists who will argue the opposite. The article below from the Times Online looks at these national and global issues.
Workers count cost of a global labour flood Times Online (29/4/07)
Migrants create job market slack Times Online (20/5/07)
Questions |
| 1. |
Using diagrams as appropriate assess the impact of recent immigration on the UK labour market. |
| 2. |
Discuss the extent to which changes in the global labour force and UK immigration have affected the level of wages in the UK labour market. |
| 3. |
Discuss the extent to which the global labour force is likely to change in the next decade. |
During the period that Mrs Thatcher was in office, the post-war trend towards greater equality of income was reversed. Although some of the changes the Labour government has made since 1997 have helped those on lower incomes, the rise in incomes at the top of the scale has meant that the gap between rich and poor has widened again. The article below from the Guardian looks at the latest figures on income inequality.
Inequality at same level as under Thatcher Guardian (18/5/07)
Questions |
| 1. |
Define the terms (a) Lorenz curve and (b) Gini coefficient. |
| 2. |
Given the changes in income distribution outlined in the article, discuss how the value of the Gini coefficient has changed since 1997. |
| 3. |
Draw Lorenz curves to show the changes that have taken place in income distribution during Mrs Thatcher’s period in office and during Tony Blair’s time in office. |
| 4. |
Analyse two policies that the government could introduce to reverse these income distribution trends. |
The national minimum wage will rise again in October 2007 by about 3% from £5.35 to £5.52. However, the Work Foundation has warned that the effectiveness of the minimum wage may be at its limits and that further rises in its level may not have the desired impact in terms of addressing inequality. The articles and press release below consider these issues.
Minimum wage up to £5.52 per year BBC News Online (7/3/07)
National minimum wage at the limits of its effectiveness The Work Foundation – press release (6/3/07)
Warning over minimum wage level BBC News Online (6/3/07)
Questions
| 1. |
Using diagrams as appropriate, illustrate the likely impact on the UK labour market of the proposed increase in the national minimum wage from October 2007. |
| 2. |
Assess the arguments given by the Work Foundation that the minimum wage is reaching the limits of its effectiveness. |
| 3. |
Evaluate two methods other than a national minimum wage for reducing levels of both relative and absolute poverty. |
Have you ever had a drink or packet of peanuts from a hotel minibar and then regretted being tempted when you saw the price on checkout? If things like minibars and internet access are so over-priced in hotels, then how can they get away with it? Why do people pay these amounts and what can economics tell us about this pricing behaviour?
Minibar economics MSN Slate (17/2/07)
Questions
| 1. |
Explain the reasoning behind hotel pricing strategies for rooms and minibars. |
| 2. |
Discuss the impact of competition on hotel pricing strategies for rooms and extras like minibars and internet access. |
| 3. |
Examine the reasons why more companies do not do “advertising campaigns boasting about their what-you-see-is-what-you-get pricing”. |
As part of its Target 2.0 competition for students, The Times published a series of briefings looking at the factors that cause inflation. The one linked below considers the role of labour markets in determining inflation.
Interplay of work and inflation rate Times Online (2/2/07)
Questions
| 1. |
Explain the key determinants of the equilibrium level of wages in the labour market. |
| 2. |
Assess the role of equilibrium labour market wages in the determination of the level of inflation. |
| 3. |
Discuss the extent to which the NAIRU is still a relevant theory when considering the determinants of inflation. |