Contemporary Society 2

1
Contemporary Society 2

• Mark Chapman
• mark.chapman_at_paisley.ac.uk
• http//www.postmaster.co.uk/fs/mchapman/Public/

2
Timetable

• Lectures
• Friday 4th April 10 12
• Monday 7th April 10 12
• Friday 2nd May 10 12
• Tutorials
• Tuesday 8th April
• Tuesday 29th April

3
Employment and Economic Growth
4
Essential Reading

• Griffiths and Wall - Applied Economics. Longman
  provides a background for these sessions
• Begg Fisher Dornbusch - Economics. McGraw Hill.
• John Sloman - Economics. Prentice Hall
• Any introductory level economics text book for
  theory on unemployment and Keynesian demand
  management

5
Essential Reading

• Articles posted on the website
• Class handouts

6
Warning

• The exam questions are based upon the reading
  material given and the tutorial not the
  lectures which only give an overview

7
Objectives

• Examine employment in the UK economy
• To compare the labour and goods markets
• Examine UK and Scottish employment trends
• To examine policies for economic growth and the
  importance of planning

8
The UK Economy

• Successful economic management achieves
• Sustainable economic growth
• Low and controlled inflation
• Favourable Balance of Payments
• Low unemployment

9
How simple is it?

• Government macro-economic policy - the day to day
  running of the domestic economy
• Changes in the structure of the domestic and
  global economies
• Externalities

10
Economic Cycles

• Sustained growth is not always achievable
• Rapid growth may lead to inflation and B of P
  problems
• Recession in other countries may affect our
  economy
• Government may act to slow UK economy
• May lead to increase in unemployment

11
Market Forces

• 4 Factors of production
• Capital
• Land
• Labour
• Entrepreneurship
• Economic growth depends on the efficient
  employment of factors

12
Labour

• Supply and demand is not as straightforward as
  the goods market
• We all have a stake in the labour market
• It is from here that most families derive their
  income
• We spend a large part of our waking hours
  involved in the labour market

13
Labour

• We devote a large amount of time developing
  skills for that market - to differentiate our
  product and increase demand for it
• By spending the profits from the sale of our
  labour (and paying our taxes) we support other
  areas of the economy

14
Labour

• The market for labour is an abstraction a
  convenient way of analysing the demand for labour
• Country
• Region
• Town
• Area

15
Labour

• Industry
• Occupation
• Skill
• Sub markets
• Inter connection socio-economic considerations

16
Why Labour is special

• Workers discretion quality and quantity of
  supply
• Co-operation required for supply of correct
  quality and quantity
• Incentive for firms to induce co-operation of
  labour (unlike C or L)
• Q and Q depend on social and environmental
  factors

17
Why Labour is special

• It also may depend on agencies peripheral to the
  labour market - government departments, quangos
• These players may contribute to the
  qualifications and training possessed by the
  workforce - the quality of the product

18
Investment

• We can invest in human capital just as we invest
  in physical capital which has two effects
• It raises a worker's productivity for the market
  in general
• It provides the skills required by a single firm
  only

19
Asset Specificity

• The more specific the skills the more difficult
  it is for the worker to sell labour in the event
  of unemployment
• The effects are felt in both the urban and rural
  labour markets - the realisation by skills
  specific workers of their vulnerability if their
  labour is no longer in demand is an important
  concern in wage determination

20
Wages and Costs

• Wages, the cost of labour, is often the single
  largest overhead for firms.
• It is savings in this area that are often sought
  in the drive for efficiency and competitiveness