ninja24
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I need help with a 25 mark essay question, but I'm not too sure where to start (labour markets topic).
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isthistaken
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What's the question?
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ninja24
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Anyone?
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abbbbbb.
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(Original post by ninja24)
Anyone?
Hi, I might be able to help- depending on the question! I am definitely better at macroeconomics than microeconomics. I recently did a 25 marker on the labour market (about wage differentials) and got 19/25. Definitely not the best at economics, but would be happy to help.
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uzyuz
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What's the question? I've just finished labour markets
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9109
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(Original post by ninja24)
I need help with a 25 mark essay question, but I'm not too sure where to start (labour markets topic).
yo, i got 23 on my last macro essay lmk the question
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ninja24
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(Original post by abbbbbb.)
Hi, I might be able to help- depending on the question! I am definitely better at macroeconomics than microeconomics. I recently did a 25 marker on the labour market (about wage differentials) and got 19/25. Definitely not the best at economics, but would be happy to help.
(Original post by uzyuz)
What's the question? I've just finished labour markets
(Original post by 9109)
yo, i got 23 on my last macro essay lmk the question
Q) Discuss whether the role of ‘key workers’ should be recognised with higher pay, after the Covid-19 crisis is over? [/B][/B]25 marks

Consider factors determining supply and demand of labour

Elasticity of demand and supply

Think about the reasons for the wage differentials you have learnt about and how you could include these

How would increases in pay be funded?

Will it be necessary to increase wages for these jobs after the Covid-19 crisis


Thank you so much for replying guys! I really appreciate it.
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toptutor234
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hello, I am good in economics. Kindly pm for assistance.
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abbbbbb.
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(Original post by ninja24)
Q) Discuss whether the role of ‘key workers’ should be recognised with higher pay, after the Covid-19 crisis is over? [/B][/B]25 marks

Consider factors determining supply and demand of labour

Elasticity of demand and supply

Think about the reasons for the wage differentials you have learnt about and how you could include these

How would increases in pay be funded?

Will it be necessary to increase wages for these jobs after the Covid-19 crisis


Thank you so much for replying guys! I really appreciate it.
First off opportunity cost!! Most of these key workers are employed by a monopsony employer, maybe you could link this idea with the opportunity cost. i.e. in UK high proportion of workers employed in the public sector, so increasing the pay the pay of them may lead to a larger fiscal deficit. Therefore to fund this increase in pay, funding may need to be taken away from other public sectors. Causing a misallocation of resources, so government failure.

Think of the elasticity of the workers. i.e. doctors and nurses have to train to take on these jobs (time lag), so the supply is likely to be inelastic compared to a shelf stacker working in a supermarket (elastic). Doctors and nurses have a higher MRP than the more lower skilled/elastic supply of workers so these groups of people may deserve a higher wage. So wage differential maybe acceptable here.

Hope this helps! Sorry if not!!
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ninja24
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(Original post by abbbbbb.)
First off opportunity cost!! Most of these key workers are employed by a monopsony employer, maybe you could link this idea with the opportunity cost. i.e. in UK high proportion of workers employed in the public sector, so increasing the pay the pay of them may lead to a larger fiscal deficit. Therefore to fund this increase in pay, funding may need to be taken away from other public sectors. Causing a misallocation of resources, so government failure.

Think of the elasticity of the workers. i.e. doctors and nurses have to train to take on these jobs (time lag), so the supply is likely to be inelastic compared to a shelf stacker working in a supermarket (elastic). Doctors and nurses have a higher MRP than the more lower skilled/elastic supply of workers so these groups of people may deserve a higher wage. So wage differential maybe acceptable here.

Hope this helps! Sorry if not!!
Oh my goodness. I didn't even think of that 0_0 These points actually make sense and you've definitely helped me man. Thank you so so much for your help I feel confident starting the essay now ahaha.
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abbbbbb.
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(Original post by ninja24)
Oh my goodness. I didn't even think of that 0_0 These points actually make sense and you've definitely helped me man. Thank you so so much for your help I feel confident starting the essay now ahaha.
no worries! glad this helped
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uzyuz
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Okay I see this is first year micro which I haven't done in a long while but:
1. Yes, because when the Covid crisis is over, demand will have increased and so the pressure on employees will have increased, which could result in labour unions protesting, so it would be smart to raise the prices before any controversy ruins reputation and the firm;'s profit margins.
2. However, considering demand will naturally rise, this will lead to an incentive of derived demand for the firms to employ more people in order to meet the new supply demanded (diagram would be increase in D and S). By raising wages, firms will have to incur increasingly higher costs, which could possibly damage firms more as they may be paying out a larger percentage of profit than beforehand.
3. In addition, another reason against raising wages would be that key workers typically aren't incentivised to be more efficient by being paid more- a nurse will not be more inclined to treat a patient better due to a higher pay, it is simply the nature of their job, and so it makes no sense for firms to hand this money out, and would be put to better use through investment. If there was a moral inclination to show key workers appreciation, it would make more sense for a one-time bonus, as It will not affect the firm's long- term profit margins.
4. More convincingly, considering the shortage of doctors and nurses the UK is suffering from, a rise in wages may increase the demand to work in that field, therefore correcting the shortage and possibly allowing the healthcare service to be more efficient. Providing this wage increase is funded by the government, the concern of profit margins being reduced is taken away.
5. Lastly, if firms were to fund these wage raises, they may have to recuperate their losses through increasing their prices. This may affect businesses negatively if the demand for their good is elastic, which would mean a loss in profits proportionally larger than the rise in prices. overall, this could negatively affect the businesses in the long term.
6. Contrastingly, as the workers in question are essential, it also implies the goods and/or services being provided are essential, and therefore the demand would be more inelastic. This means that an overall rise in wages would not have an effect on the number of goods sold, even if the prices were raised, because the demand remains the same regardless of price, so firms can continue at their profit margins.
Hope this helps- I am rusty on year 1 micro
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ninja24
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(Original post by uzyuz)
Okay I see this is first year micro which I haven't done in a long while but:
1. Yes, because when the Covid crisis is over, demand will have increased and so the pressure on employees will have increased, which could result in labour unions protesting, so it would be smart to raise the prices before any controversy ruins reputation and the firm;'s profit margins.
2. However, considering demand will naturally rise, this will lead to an incentive of derived demand for the firms to employ more people in order to meet the new supply demanded (diagram would be increase in D and S). By raising wages, firms will have to incur increasingly higher costs, which could possibly damage firms more as they may be paying out a larger percentage of profit than beforehand.
3. In addition, another reason against raising wages would be that key workers typically aren't incentivised to be more efficient by being paid more- a nurse will not be more inclined to treat a patient better due to a higher pay, it is simply the nature of their job, and so it makes no sense for firms to hand this money out, and would be put to better use through investment. If there was a moral inclination to show key workers appreciation, it would make more sense for a one-time bonus, as It will not affect the firm's long- term profit margins.
4. More convincingly, considering the shortage of doctors and nurses the UK is suffering from, a rise in wages may increase the demand to work in that field, therefore correcting the shortage and possibly allowing the healthcare service to be more efficient. Providing this wage increase is funded by the government, the concern of profit margins being reduced is taken away.
5. Lastly, if firms were to fund these wage raises, they may have to recuperate their losses through increasing their prices. This may affect businesses negatively if the demand for their good is elastic, which would mean a loss in profits proportionally larger than the rise in prices. overall, this could negatively affect the businesses in the long term.
6. Contrastingly, as the workers in question are essential, it also implies the goods and/or services being provided are essential, and therefore the demand would be more inelastic. This means that an overall rise in wages would not have an effect on the number of goods sold, even if the prices were raised, because the demand remains the same regardless of price, so firms can continue at their profit margins.
Hope this helps- I am rusty on year 1 micro
Thank you, will definitely take into account these points! And no aha this is year 2 micro (labour markets).
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uzyuz
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(Original post by ninja24)
Thank you, will definitely take into account these points! And no aha this is year 2 micro (labour markets).
This is really funny I actually have just finished year 2 labour markets- errrr it might be that we're on different exam boards because I am pretty sure we haven't covered the sort of stuff somebody else mentioned- I'm on AQA lol. Hope whatever I said could be used in some way, apologies for misunderstanding
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ninja24
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This is really funny I actually have just finished year 2 labour markets- errrr it might be that we're on different exam boards because I am pretty sure we haven't covered the sort of stuff somebody else mentioned- I'm on AQA lol. Hope whatever I said could be used in some way, apologies for misunderstanding
Oh no it's okay aha! I do OCR economics, I'm normally fine with essays but this one is a bit weird so I needed some ideas. Everything you mentioned is very relevant so no need to apologise man. Thank you so much for your help.
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uzyuz
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(Original post by ninja24)
Oh no it's okay aha! I do OCR economics, I'm normally fine with essays but this one is a bit weird so I needed some ideas. Everything you mentioned is very relevant so no need to apologise man. Thank you so much for your help.
Definitely an interesting and relevant question- just massively broad so I can understand the confusion, esp since (for whatever reason) I find that Econ teachers are always less willing to actually give you starting points and just leave you to your own devices. Glad I could help x
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