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15 Cards in this Set
- Front
- Back
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Labour Productivity
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Labour Productivity=Output per unit of labour per hour/per year
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Capital Productivity |
Output per unit of capital per hour/year |
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Supply side policy |
Government policies designed to promote market forces in order to increase economic growth. Shift AS right, shift ppf outwards. They aim to increase productivity and/or competition in product or labour markets |
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1.Labour Market Policies |
Reforms of employment laws; reduction in trade union powers, measures to encourage the expansion of short term and part-time labour + Zero hour contracts Firms can maximize their output for number of workers employed and therefore raise productivity |
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Evaluation 1.Labour Market Policies (Zero hour contracts) |
Flexible to hire and fire=improves productivity More free time for worker (good for students) Zero hour contracts; No guaranteed work. Can't plan life around work (plan finances) Sometimes overworked Not reliable (difficult to get mortgage)
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2.Encourage inward migration of labour |
Lead to a rise in productivity; increased in skilled labour + more competition in labour market (which can lead to more skill). Reduces production costs through lower wages. |
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Evaluation 2.Encourage inward migration of labour |
Lower wages could mean lower motivation therefore lower productivity
language barriers are a problem If immigrates don't find work it could lead to excess supply of labour meaning more unemployment=more benefits=more tax |
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3.Education and training |
Increased state funding for education Tax relief for firms running training schemes Can raise productivity; Increased skill level -Familiarizing workers with equipment -increasing team work -Improves problem solving ability |
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Evaluation 3)Education and training |
Takes a long time It will not fix the persons short term problems People may not be able to afford education Doesn't secure a job Economy may not need the skill in the future Opportunity cost |
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Capital Market policies 1.Tax Incentives |
Reduces company's tax bill, encouraging more research and development spending. R&D will lead to production method enhancement, increasing productivity. |
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Evaluation 1.Tax Incentives |
-Time lag -Not all potential inventions are useful -Opportunity cost |
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2.Policies to encourage profit making |
Lower rates of corporation tax on company profits. More profits will lead to more investment and therefore higher productivity as the workforce will have high tech capital. |
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Evaluation 2.Policies to encourage profit making |
Lowers tax revenues for government (increasing budget deficit), however the low tax might promote foreign companies coming to the UK, therefore increasing future tax revenue |
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3. Infrastructure Investment |
Provides building jobs and future employment +Benefits of particular building (Train=high speed travel) |
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Evaluation 3.Infrastucture |
Not good environmentally to build (machines) and maybe built on green sites or lead to future pollution. (also noise pollution) Expensive to build |
