Microeconomic Policy

Microeconomic Policy

A New Perspective

Clem Tisdell and Keith Hartley

This thoroughly accessible textbook shows students how microeconomic theory can be used and applied to major issues of public policy. In this way, it will improve their understanding of both microeconomic theory and policy and also develop their ability to critically assess them. Clem Tisdell and Keith Hartley have expanded upon their previous successful work on microeconomics. As a result, this new book is considerably updated with substantial chapter revisions, as well as new chapters dealing with business management, ownership, environmental issues, public choice, defence, conflict and terrorism.

Chapter 11: Labour Markets

Clem Tisdell and Keith Hartley

Subjects: economics and finance, industrial economics

Extract

INTRODUCTION: THE SCOPE OF MANPOWER POLICY Manpower policy embraces all aspects of government policy towards labour as a factor of production and in relation to the operation of the market for labour. While the list of potential policy issues is extensive, they can be classified around the broad demand, supply and relative wage variables in the market. Examples include state involvement in determining relative pay, particularly between the public and private sectors, as well as information provision and policies towards the unemployed, training and re-training, mobility, and regional development. Governments might also make provision for special groups, such as the disabled, school-leavers, the long-term unemployed, the elderly, women and immigrants. Such policies often reflect a concern with both economic and social objectives. Indeed, labour markets are often regarded as ‘different’ since they involve transactions in people and their services. People are both consumers and workers, and the income obtained from work will clearly affect their consumption levels. Not surprisingly, governments aiming to reduce poverty and economic deprivation have frequently intervened to raise the wages of the low-paid through, for example, legislation on minimum wages and equal pay. Such policies can have perverse effects and they raise basic questions about the function of labour markets. This chapter will outline the economic arguments which might justify government intervention in the labour market and the likely effects of intervention. Consideration will be given to the characteristics of labour markets, the behaviour of individuals in the market, and...

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