Supply Side Policies
- Created by: ekenny5
- Created on: 19-04-22 11:17
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- Supply Side Policies
- supply side policies lead to supply side improvements if successful
- objectives of supply side policies
- improve incentives to look for work
- increase labour and capital productivity
- increased occupational and geographical mobility
- increase investment and research and development spending
- promote competition and stimulate innovation and invention
- sustained non-inflationary growth
- improve trend rate growth
- improve trade-offs between inflation and unemployment
- rise living standards
- reduce unemployment
- Interventionist
- state investment in public services and infrastructure
- minimum/ living wage improvements to improve incentives
- higher taxes to fund public goods
- import controls
- regional policy
- exchange rate intervention
- nationalisation/ regulation of industries
- improving human capital - skills, knowledge, health, social attributes
- Free market
- cutting government spending (welfare) and borrowing
- lower business taxes to stimulate capital investment spending
- lower income tax rates
- reducing red tapes to cut costs of business
- improving the flexibility of the labour market
- reform employment laws
- competition policies - deregulation, anti-cartel laws
- privatisation of state assets
- opening the economy up to overseas trade and investment and inward migration of skilled workers
- Attracting FDI
- attractive rates of corporation tax
- subsidies or tax relief
- trade and investment agreements
- flexible labour markets
- high quality infrastructure
- open capital markets to allow remitted profits
- attraction of low unit labour costs
- Inward labour migration
- a feature of globalisation
- 250 million people living where they weren't born
- economic benefits
- higher labour productivity and skills
- increase labour supply
- drives innovation
- positive multiplier
- tax revenues
- remittances sent to home countries
- risks/ costs
- welfare costs
- displacement of domestic workers
- rising demand for houses increasing house prices
- poverty risk
- a feature of globalisation
- Improving Labour Mobility
- reduce occupational mobility -
- funding for workplace training
- teaching skills
- apprenticeships and internship
- improving geographical mobility
- building houses to keep property prices low
- regional policy
- stimulate work incentives
- higher NMW
- reduce income tax
- welfare reforms
- reduce the natural rate of unemployment by reducing structural issues
- reduce occupational mobility -
- Micro effects
- improved flexibility of the labour market
- improved competitive in product markets
- higher levels of innovation
- greater efficiency and productivity of firms
- Macro effects
- lower unemployment and reduces the natural rate of unemployment
- improved international competitiveness
- increased long run aggregate supply
- improved living standards
- reduced inflationary pressures
- improved living standards
- greater flexibility to withstand shocks
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