Discuss alternative government policies for reducing the rate of inflation in an economy Free essay! Download now
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Discuss alternative government policies for reducing the rate of inflation in an economy
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| Words: 2077 | Submitted: 30-Oct-2011
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DescriptionDiscuss alternative government policies for reducing the rate of inflation in an economy and also "Explain why labour may be geographically and occupationally immobile" and "Assess three government policy measures to increase the occupational mobility of labour"
10a. Explain why labour may be geographically and occupationally immobile. (8 Marks)
Labour mobility is the ability of labour to move from one sector of the labour market to the other. This may mean changing occupation (occupational mobility) or moving to work in another area (geographical mobility). Labour immobility is the cause of structural unemployment, where workers are unable or unwilling to fulfil the existing vacancies in the labour market.
Labour may be geographically immobile due to family commitments and friendship ties as the unemployed person may not want to move area for work as they cannot leave their family and don’t want to feel lonely in another area as they will be isolated from their friends for at least the weekdays. Another reason why geographical immobility may occur is due to a lack of knowledge. A Northerner may not hear about a job vacancy in the South as there is large distance and the firm offering the job may not advertise the vacancy in the North if they are situated in the South. However, the government is looking to improve this fault through introducing nationwide job vacancy searches in Job centres across the country. Also, if a Northerner does hear about vacancies in the South they may feel that it is too expensive to Live in London where the job is and therefore this will prevent them from applying for the job as property and living expenses are too costly in the South.
Occupational immobility is due to the labour force not having a high enough level of skills. This was evident in the 19th century when the mining industry grinded to a halt as industrialisation kicked in causing all the miners who have been miners all of their lives to not possess the skills needed to change occupation. Non-transferable skills are said to be the root cause of occupational immobility and therefore structural unemployment. Clearly this leads to a waste of scarce resources and represents market failure - because social welfare is not being maximised.
10b. Assess three government policy measures to increase the occupational mobility of labour. (12 Marks)
Governments introduce policies to increase the occupational mobility of labour as improving occupational mobility will reduce the damaging effects of structural unemployment.
One method to improve occupational mobility is to enhance skill levels in the labour market though increasing funding for education and training. Education is a merit good which is considered to be under-provided in the free market and should therefore be subsidised/provided for by the government. Education and training will provide workers with transferable skills which means that they can change occupation within the labour market without too much hassle and therefore reduces unemployment. It is particularly helpful in reducing structural ...
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