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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 BBC Rradio 4 In Business - click here
See also: the Job Rich Depression (The Economist)read more...»
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 Commissionread more...»
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...»
This excellent news video from Channel 4 news looks at the changing pattern of employment in the UK economy. The number of full time workers is dropping and there has been a big switch towards part-time employment. Who are the winners and losers in our labour market as the fragile recovery struggles to maintain momentum?read more...»
Professor David Blanchflower didn’t pull his punches when he was a member of the Bank of England’s Monetary Policy Committee and he is making his mark once more with an attack on what he views as the Coalition government’s lacklustre approach to tackling youth unemployment. Blanchflower is reported in the Guardian as wanting zero national insurance contributions for employers who take on younger workers in depressed regions and localities. And he wants greater investment in vocational education in schools and colleges with the school-leaving age raised to 18.read more...»
As ever, there are loads of sources that students can use to analyse the Budget and to extract pieces of Evidence for the Examples they will need to add depth to their analysis in essays. Those who are attending the current round of revision workshops will recognise this as a key part of ensuring that they write essays which PEEL the answer (each paragraph makes one Point, using Examples with Evidence, offering Evaluation and Linking to the question). As start points, I would suggest these sources which are reasonably free of opinions:
BBC website: Budget 2012 at a glance, Farewell 50p tax rate, and Over 65-s tax-free income freeze
The Guardian Budget 2012: welfare cuts, tax cuts too, but retreat on child benefit and for the visual learners a nice graphic version: Tax and spending plans visualised
One of my favourite little statistical gems has always been the claim that the NHS is the world’s third largest employer, after the Indian Railways and the Chinese army, so it is deeply disappointing to find that this is not true - it’s actually only the fifth on the list with 1.7 million staff.
Ahead of the NHS are McDonalds’ global workforce in 4th place (1.9 million), Walmart, including Asda in the UK in third (2.1 million), the Chinese army 2nd with 2.3 million and, at the top of the table, the US Department of Defense with a whopping 3.2million staff - although only 1.6 million of these are on active service,with the rest in civilian and other support roles.read more...»
On Thursday, I was fortunate enough to get a ticket to see Michael Sandel speak at LSE. I have attended several events at LSE in the past two years and this was, by some margin, the best I have seen. Michael was delivering the first of three lectures and the subject for discussion was whether bankers should be paid more than nurses. Although this type of discussion is commonplace in our classrooms, Michael’s background as a philosopher meant that the event had me thinking about the issue in new ways. The style used relies almost entirely on contributions from the audience and makes it difficult to summarise but what follows is my best effort.read more...»
Migration from one country to another has become an increasingly important feature of our globalizing world and it raises many important economic, social and political issues. About 200-million people — about 3% of the world’s population — now live in countries in which they were not born. In the United Kingdom in 2010, the number of international migrants as a percentage of the population rose above 10% for the first time after several years of high rates of net inward migrationread more...»
A summary of the highest and lowest paid jobs in the UK labour market can be found here. I often use this data and resource links as starting points for discussion introductory labour market economics for EdExcel Unit 1 and it might also be handy for AQA Unit 3 economics.read more...»
Here is an updated presentation for A2 microeconomics on some economic aspects of trade unions in the UK. Updated in Nov 2013 with a clip from the FTread more...»
We have followed Stephen Stubbs on the economics blog before. This committed man from the north-east of England has been out of work for more than a year and had filed nearly two thousands job applications in a concerted and lengthy pursuit of a fresh job. What marvellous news it is that he has found work with the student loans company. Here are two videos that tell the story of his long and difficult pathway to finding new work.read more...»
Here is a selection of short news video resources on trade unions in the UKread more...»
I am teaching trade unions as part of our study of labour markets in the UK and the rest of Europe. This data from Timetric tracks the number of days lost from industrial disputes / stoppages and is always useful in providing historical context. Data on UK trade union membership can be found here
* Trade union density for employees in the UK was just 26.6 per cent in 2010
* Trade union membership levels for UK employees was 6.5 million compared with 2009. Across all sectors of the economy, just under half of UK employees (46.1 per cent in 2010) were in a workplace where a trade union was present
* The hourly earnings of union members, according to the LFS, averaged £14.00 in 2010, 16.7 per cent more than the earnings of non-members (£12.00 per hour)
The award-winning journalist Paul Mason provides this video report on low pay for hundreds of thousands of people who work for the big four supermarkets. I use this video when teaching monopsony power in the labour market. For many people, supermarket workers’ wages are being supplemented by state benefits such as child tax creditsread more...»
This article could be useful as an illustration of the EU context in relation to employment in general, and flexible employment in particular. Attracting inward FDI is arguably a significant benefit of UK membership of the EU, and one of the advantages which the UK can offer compared to, say, France is relatively flexible employment laws.read more...»
This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion.
The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estatesread more...»
Tim Harford has a piece in his regular column in the Financial Times which discusses some of the issues surrounding the minimum wage and whether a legal pay floor can actually create jobs. Here is the link
This blog entry brings together a selection of recent news reports and videos covering the economics of unemployment in the UK and inother countries.read more...»
In A2 macroeconomics the underlying causes of economic growth and development and constraints on both of these are covered in more depth. One of the concepts students might be familiar with is that of human capital.
I have always summarised the idea of human capital as being a measure of the overall quality of the human input available to produce goods and services in an economy. The ONS have published a new study on the value of human capital in the UK and they draw on a definition given by the OECDread more...»
One feature of the jobs market data in the UK in the last couple of years has been the surge in measured levels of self-employment (the data is collected as part of the huge Labour Force Survey)
The total number of self-employed people in the UK increased by 166,000 in the three months to the end of November to reach 4.14 million - this is the highest number of self-employed people since comparable records began in 1992.
What helps to explain the growth of self employment? Optimists might claim that it is a sign of a pick up in entrepreneurial activity in Britain as many people who have been made redundant decide to strike out on their own by starting a new business.
A more realistic explanation is that rising self employment is a sign of macroeconomic weakness. Hundreds of thousands of people have lost their jobs and a sizeable number will simply re-categorise themselves as self employed when they are quizzed as part of the Labour Force Survey. They are likely to be scouting around for jobs and are much likely to take one or more part time jobs when they can.
Part time employment was up sharply, but do not forget that the number of full-time employees fell by 188,000 in the three-month period covering August, September and October - that is more than 2,000 people per day losing their jobs.
The Coalition Government recently heralded a new scheme designed to address the structural problem of high youth unemployment in the UK economy. Under their “youth contract” plan, employers will be given “wage incentives” worth £2,275 to take on some 160,000 18-to-24-year-olds. But will it have much impact on the problem? The independent Office for Budgetary Responsibility says that the net effect on overall unemployment will be close to zero, because the subsidy incentive will lead to a switch in employment away from older workers.read more...»
Around this time of my micro course my students look at maximum prices (price ceilings) in different markets. There are still plenty of contemporary examples to consider, for example salary caps for executives, caps on the cost of mobile phone texts and roaming charges, rent ceilings etc. But here is a resource that will be of special interest to football-loving economists, namely the 50th anniversary of the ending of the maximum wage in football. The Independent has this nifty set of graphics looking at landmarks in wages of top footballers over the years. Click on: The maximum wage and football’s money trail
The presentational style might leave a little to be desired, but this analytical ONS video might provide colleagues with a different teaching resource to help explain the rapid rise in UK unemployment.read more...»