Students looking for a good example of a supply-side policy for improving the economic performance of the UK may be interested in this news article about how increasing the labour participation rates of women in the UK could lead to an increase in GDP by up to a staggering 10%. This growth could be achieved by encouraging the number of women wishing to provide their labour (or increase the provision of their labour) to the same level as men.
The common view now is that legislation is no longer good enough in itself to provide this encouragement. The Equality Act of 2010 combined the various equal opportunity laws together to penalise businesses that operate unequally. What appears to be needed is an improvement in the accessibility, availability, cost and quality of childcare facilities to allow more mothers to work (or work longer).
A further article (follow this link) explores how this principle is equally true of the Japanese economy. This article has a fantastic graph comparing the female participation rates for many of the major economies which might be a fantastic data example for teachers to use as a compare and contrast exercise.
As for the costs on society of such a policy....... That's a different question!
As thousands of undergraduates across the country approach their final exams, a new study from the Centre for Economic Performance (CEP) reveals the importance of the results for subsequent earnings – specifically the value of a First compared with an Upper Second and the difference between an Upper Second and a Lower Second.
employer's point of view, a zero hours contract is a great example of the
benefits of the flexible labour market. They allow the employer to change the
number of hours an employee works each week, with more shifts offered when they
are busy, and fewer when they are not; costs can therefore be controlled and
matched more exactly to revenue. Neil Carberry at the CBI says that they have
helped to save jobs during the recession and stagnant growth: "It's zero
hours contracts and other forms of flexible working that mean there are half a
million fewer unemployed people than there might otherwise have been." Now
figures from the Office of National Statistics (ONS)
show the number of 16 to 24-year-olds on zero hours contracts has more than
doubled since the start of the economic downturn, rising from 35,000 in 2008 to
76,000 in 2012. This means that one in every three people on a zero-hours
contract is under 25 (- although that proportion doesn't look as if it has
changed very dramatically throughout the period shown). If this is good for the employer, how is it for the
Those of you who are about to take your Econ 3 exam (or whose students are getting ready for the final push), might find this story about sexism in TV an interesting example of inequality in the labour market. A report out yesterday and being pursued by Deputy Leader of the Labour Party, Harriet Harman suggests that a lowly 18% of UK TV presenters over the age of 50 are women. Some channels are worse than others.
The story is also a good example of how current government intervention in this labour market is having little effect. Anti-ageist and sexist laws exist and yet there appears a very real 'glass-ceiling' when it comes to women over the age of 50 wishing to work on TV. If legislation is ineffective what other policies could students suggest might improve the situation? A quota system? Fines? Here is a real chance to offer critical and evaluative analysis on government intervention.
Follow this link to read a report.
Here is a streamed (and downloadable) presentation on policies to cut unemployment in the UK economy.read more...»
He's back but he's still angry! In this latest version of The Angry Economist, our favourite curmudgeonly analyst wants to know students' opinion on George Osborne's economic policies - no wonder his blood pressure has risen!
This simple Powerpoint resource is aimed at getting your students to analyse and evaluate economic policies - 8 of the Chancellor's policies are presented and the Angry Economist randomly picks a macro-economic objective to consider. All you have to do is get 8 volunteers from your class to do the analysing - a great 10 minute activity whilst revising for the up-coming macro exams at either GCSE, AS or A2 level.
Here is a list of the policies the Angry Economist wants students to look at (you may wish to recap on them before you start the activity):
- Reduce Government debt
- Increased number of private sector jobs
- Increased allowance before Income Tax needs to be paid
- Cut Corporation Tax
- Set up Regional Growth Fund
- Funding Lending Scheme
- Deregulating some planning rules
- Frozen Council Tax
Of course, the beauty of this resource is that you can change any of these policies to whatever you want them to be.
Click on this link to download the Angry Economist 2.
PS. Click on this link to have a look at the original Angry Economist.
Where have all the miners gone? To judge by the rhetoric of the BBC and other Leftist media outlets, whole swathes of Britain lie devastated, plagued by rickets, unemployment and endemic poverty – nearly thirty years after the pit closures under Lady Thatcher!
The reality is different. There is indeed a small number of local authority areas where employment has never really recovered from the closures in the 1980s. But, equally, there are former mining areas which have prospered.
The annual NORFACE migration conference at University College London this week has generated plenty of new research papers on the economics of international migration, a topic that of growing significance for students of globalisation, competitiveness, innovation and growth. Some of the key findings are summarised below together with external links to relevant articles and news reportsread more...»
GDP per hour – labour productivity – in the UK remains lower than at the beginning of the recession in 2008. A special session at the Royal Economic Society on Friday 5 April held jointly by the Centre for Economic Performance (CEP) and Institute for Fiscal Studies (IFS) investigated the causes of this mystery. It was also the subject of radio 4 In Business - click here
See also: the Job Rich Depression (The Economist)
The UK national minimum wage (NMW) has been in the news in recent days with several reports suggesting that Coalition government ministers are considering introducing a freeze on the pay floor or going further and reducing the minimum hourly pay rate. The NMW was introduced into the UK in the spring of 1999 and has been up-rated regularly but never cut. It is presently at £6.19 an hour and recommendations on changes to the pay floor come from the annual review conducted by the Low Pay Commission
I know that it is April Fools Day, but the new and quite radical social welfare reforms are starting to come in to play from this week and they are genuine!
Use this link to access a document that summarises the main changes to the welfare reforms. You can use this document as a lesson activity to discuss government policies to achieve macro-economic objectives.
Are these reforms just aimed at reducing the government's debt or are they aimed at improving the unemployment situation? Are they part of a wider supply-side set of policies aimed at making the UK workforce more effective and flexible?
Could students discuss each policy's strength and weakness? Could they suggest alternative and (possibly) more effective policies.
Like many teachers, I'm firmly of the belief that money is not the root of happiness. I have to think like that - otherwise how do I argue with my old university friends who went to join the big banks that there’s more to life than big cars and foreign holiday homes ("Come and join us, Jon," they used to say to me, "you can set your own Libor rate and everything" ). It's important that we remind the 'those-who-can't-do' brigade that teaching is a life-style. It's a vocation. A calling.
Well, according to research by US academics Daniel Sacks, Betsey Stevenson and Justin Wolfers, the evidence suggests that wealth is a determining factor in happiness after all. Apparently, the data shows that there are no upper limits to happiness with regards to money – yes, the increase in happiness slows down but still rises.
Quick, somebody tell Victoria Beckham before David gives away all of his cash to the Paris children.read more...»
Robert Nutter explains that, over recent years, the fear that the minimum wage would cause increased unemployment has not materialised, although since the start of the current economic crisis employers have expressed some concerns that employment may be affected in low paid jobs. Another concern has been the belief that a national minimum wage is inappropriate for an economy where costs and labour market conditions vary significantly between regions. The national minimum wage may perhaps provide a living wage in North-East England but certainly not in London.read more...»
Immigration lowers the wages of relatively low-skilled native employees in sectors of the service economy that hire bigger shares of foreign workers. But the cost reductions that employers enjoy from lower wages are typically passed on to consumers: price inflation is much higher for services with no change in immigrant employment than for services where immigrant employment is growing.
These are among the findings of research by Professors Bernt Bratsberg and Oddbjørn Raaum, published in the latest issue of the Economic Journal. Their study confirms that there are clear winners and losers from labour migration: low- and semi-skilled workers face increased competitive pressures on their wages and employment while consumers enjoy more services at lower prices.
Any visa policies that restrict entry by highly productive foreign students are a significant barrier to science and ultimately to innovation and growth. That is one of the conclusions of research by Professors Eric Stuen, Mushfiq Mobarak and Keith Maskus, published in the latest issue of the Economic Journal.
Their study of 700,000 postgraduates in the science and engineering laboratories of the top US universities finds that American students and foreign students are both highly significant contributors to the development of scientific knowledge. But greater diversity in the origins of foreign students raises their joint contribution to knowledge.
These findings imply that visa restrictions limiting the entry of high- ability foreign students – as well as visa policies that prioritise students’ ability to pay tuition fees over their technical merits – would significantly undermine scientific output.
|Employment Rate||Employment Rate||Unemployment Rate||Unemployment Rate||Inactivity Rate||Inactivity Rate|
|Mixed or Multiple||64.3%||55.3%||15.7%||15.8%||23.7%||34.3%|
|Chinese & Other||67.0%||51.8%||10.3%||10.6%||25.3%||42.1%|
If you have seen the news stories today showing how workplace discrimination towards ethnic minority women continues to cause the government concern, you may be interested to read the full report. It is available from the Runnymede Trust (it requires registration but it is free) and has been written for the All Party Parliamentary Group on Race and Community. There's a brief summary from the BBC, but the full report gives recommendations that you might like to present to students as possible government intervention strategies and get them to evaluate accordingly. The table above gives you a flavour of the statistics that can be used to discuss inequality of income and wealth.
If you can get beyond the monotone voice which accompanies the presentation, this ONS piece posted today gives a fascinating insight into reasons why there are differences in public and private sector pay. There are many high quality evaluative points made, and interestingly it is implied that average data is likely to suggest that pay in the public sector is more likely, on average, to be higher than that in the private sector.
How can this be?read more...»
My AS macroeconomics students this week are researching the topical issue of a living wage and the possible macroeconomic effects. The title of the assignment is:
"The introduction of a living wage in Britain to supplement a minimum wage will improve the long term performance of the UK economy" Discuss. (20 marks)
I have put together some news articles and videos on this topic using a Pinterest Board. You can find it by clicking here
BBC Newsnight Report on Living Wages - July 2012 - click here
You may have been too busy to notice but today has been National Stress Awareness Day. This comes just a few days after Ed Milliband's speech about the taboo of Mental Health and how it impacts upon people's lives. If you haven't done so recently, do check out the World Health Organisation 's website which has lots of data on the prevalence of mental health issues around the world with the most startling facts being that 1 in 4 people around the world suffer from mental health issues at some point in their lifetime affecting as many as 450 million people.
And yet, when was the last time you used this as an example of labour market failure or poor economic performance?read more...»
Jonny Clark has beaten me to it with his blog about today's news about the Living Wage - there is a rich seam of resources here for issues for study around poverty and inequality. The concept has high level support - hailed by Boris Johnson as it is "....not only morally right, but (it)makes good business sense too." and endorsed by Ed Miliband as " A really important idea". I would like to add a trio of items from the BBC website which could add evidence to student analysis - particularly as Nov 4th-10th is designated Living Wage Week , so this could make a timely topic on the return from half term!
Unit 4 essay from Max Goswami-Myerscough
China has undergone high levels of wage inflation since the turn of the century. As stated in the extract, a US Bureau of Labour report showed that between 2002 and 2008 real hourly wages more than doubled in China’s manufacturing sector. Comparatively, wages only rose by 20% in the US. In addition to this, according to Jim O’Neill, by 2009 over 5% of the population of China (approx. 65 million) had incomes of around $35,000 p.a. China has been considered to be one of the main outsourcing destinations for cheap labour over the years but this may change if such high levels of wage inflation persist.
This Financial Times news video is excellent on issues surrounding high rates of youth unemployment. The number of 18- to 24-year-olds out of work for at least six months has risen by more than a third in the past year to 403,000.
Many thousands are struggling to find work and the lack of apprenticeship schemes and the high level of short term or vulnerable contract work makes it extremely tough to get into formal work. More and more students are looking to establish their own businesses as an alternative. The rapid expansion of student-led entrepreneurship societies based around colleges and universities is a welcome development. So too is the rise of “start-up” milk-rounds at many of the UK’s universities. Challenging times yes, but opportunities will always exist for enquiring minds with ideas to incubate and grow.read more...»
Wages are rising fast in China – many economists believe that China has hit a stage in its development at which demand for labour starts to grow faster than supply, creating labour shortages and pushing up salaries. This is known as a Lewis Turning Point.read more...»
The financial crisis in the European Union is prompting an exodus of many young people from struggling EU countries - this short new report looks at the effects of people from France migrating to the Ivory Coast - does the host nation benefit in the medium term?read more...»
A revision blog on the economic impact of migration on the UK economyread more...»
Today, TUC figures showed that the number of men working part time who are looking for full time work has doubled in the last four years from 293,000 to nearly 600,000. Is this a sign of the recession or is it an inevitable result of a move towards more flexible working?read more...»
The campaign for a living wage has gained renewed prominence in the last year or so. Students and teachers wanting to know more about the minimum and the living wage debate might find this background blog from Channel 4 news relevant and useful. More here on the living wage from the Citizens UK web page.
Here is a pertinent and timely resource from Channel 4 news on overcoming the principle agent-problem. Are shareholders in some of our leading companies becoming more active in holding senior executives to account for poor performance? or more concerned with their own shareholder value at a time when CEO earnings continue to grow well above inflation? I own plenty of shares but have never once been to a company AGM or exercised my right to vote. Could planned legislation further embolden activist shareholders and shake up boardrooms across the UK? More on the debate over the shareholder spring here See also BBC news: FTSE 100 bosses’ pay ‘rose 11% last year’ And: FTSE 100 bosses’ pay unrelated to results, report says (BBC news, May 2012)read more...»
How long can China keep its comparative advantage of cheap production for manufacturing goods? We are aware of rising inflation in China which is eroding their advantage, and here is an article about a UK firm which manufactures cushions, some from a factory in Kirkby on Merseyside and some from his factory in the Zhejiang province in China. The story comes from a programme ‘The Town taking on China’ to be shown on BBC2 at 8pm tonight - and subsequently on i-player.read more...»
Here is an example of monopsony power in the labour market and the risk of exploitation of employees. Britain’s largest recruitment agency, Adecco, is being accused of short-changing temporary staff by rounding down their holiday pay. Hundreds of thousands of people are employed by contract recruitment businesses - this is a timely reminder of the importance of employment legislation as a means of protecting the pay and conditions of people in vulnerable jobs.read more...»