Economics Assignment: UK Labour Market Analysis - Seminar Sheets 6 & 8

This economics assignment analyzes the UK labour market, focusing on human capital theory, education's signaling role, and wage inequality. It examines the decision-making processes of individuals regarding education, calculating gross rates of return and analyzing variations in employee wages across different groups. The assignment delves into the impacts of skilled-biased technology on unskilled workers using demand and supply curves and explores policy-related questions concerning education financing and interventions to reduce wage inequality. The analysis includes empirical data and statistical tools to assess economic conditions and predict future market trends, incorporating seminar sheets 6 and 8 to offer a comprehensive understanding of the UK's economic landscape and policy implications. The assignment also considers the implications of recent changes in financing higher education in the UK and the impact of international competition on the manufacturing sector.

ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Seminar Sheet 6: Human Capital Theory and Education................................................................1
1. Analysing the decision-making approaches of an individual in terms of financial costs and
benefits presented in diagram.................................................................................................1
2. Signalling role of education................................................................................................3
Empirically-Oriented question.........................................................................................................4
1. a) Calculating gross rate of return......................................................................................4
b) Analysing the variation in the rate of return for the employees performing in two different
groups.....................................................................................................................................5
2. a) Determining the reason behind inaccurate outcomes through data base........................5
B) Ascertaining the reason regarding higher employment rates............................................5
Policy Related Questions:................................................................................................................6
Human capital and Signalling explanations...........................................................................6
Recent changes in financing higher education in UK............................................................6
Seminar sheet 8: Labour market inequalities...................................................................................7
1. Analysing impacts of skilled biased technology affects labour market of unskilled workers
with reference to demand and supply curve...........................................................................7
2. Identifying the impacts of increased international competition in manufacturing sector
affects labour market for unskilled employees.......................................................................9
Empirically-Oriented questions.....................................................................................................10
1. Calculation of measure of inequality among two reasons................................................10
Q.2 Consistent measure for level of inequality....................................................................10
Q.3 Calculation of level of inequality..................................................................................10
Policy-Focused Questions..............................................................................................................11
1. Policies which introduced by government to reduce level of wage of inequality............11
2. Explanation on reason behind policies which may not be popular or achievable from
political perspective..............................................................................................................15
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
In an economic scenario there are various factors and elements which are required to be
considered by government before planning and decision making. It includes strategies for
monetary system, employment, domestic production and relevant factors which affects national
growth. In the present report, there will be discussion based on UK’s labour market with
reference to various statistical data base and relevant outcomes. Report will analyse changes
incurred in labour market as well as predict future growth for the same. Along with this, there
will be measurement on information with influences of statistical tools such as mean, mode,
median, quartile, percentile etc. to have accurate analysis over economic conditions in nation.
Seminar Sheet 6: Human Capital Theory and Education
1. Analysing the decision-making approaches of an individual in terms of financial costs and
benefits presented in diagram
Education is considered as most effective tool for development of individual and for
developing economy of country. For development of country, it is necessary that people of
country will earn good. There are some students who are benefited with high quality education at
secondary level but did not enroll in college, did not invest for their education. Government have
developed multiple strategies so that individuals who are capable will complete their higher
education and will make efforts to bright their future. Federal student aid policy is one among
them Therefore, more development of education among people of country, government has
developed federal set of policy in which loan with less interest rate is provided to students who
wants to complete their education.
Private rate of Return: It is similar to discount rate which equalise the real cost spend on
education during graduation time and analyse the real gains after completion of the education. It
considers, costs belong to tuition, foregone earnings, gains through net taxes in employment as
well as various resources through which a student can have funds for education. There will be
influences of loans and grants which were being used in education that can be treated costs
implicated by them in education (Forder and et.al., 2018). However, to articulate decision
making of an individual there will be analysis over financial cost as well as gains as per below
listed graph.
Social rate of return: This is the rate which determines that the costs and gains to the
social environment which reference to make investment in education. There has been influences
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of opportunity cost on the basis of people which are participating the production activities
(Crépon and et.al., 2018). It consists of the benefits to society with reference to raise in the
productivity.
Interpretation: On the basis of above listed pictorial presentation of the higher education
spending of the individual as well as long term benefits associated through them. There has been
requirement of less time and costs in the graduation of an individual. Thus, 3-4 years of
education will help a person in earning higher benefits for the longer period of time. Thus, the
costs which were being spend in education is comparatively less investment than the higher gains
stated in the future. Gains can be differentiated on the basis of education acquired by an
individual such as secondary school leavers will have less returns than the University graduates.
now there are more than four out of five direct loan students which means nearly 3 million
recipients are there who take direct loan to invest in their education. Its overall benefits is that to
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develop the career, workers which have bachelor degree are earning nearly 1 million in
comparison to workers who are just diploma holder.
2. Signalling role of education
In accordance with the signalling theory, there have been ascertainment of the data base in
each period with context to a graphical presentation. In accordance with the shift in the graph at
upwards of downward direction. In respect with considering the Job market on which potential
employees sells their services in against wages and prices (Maesse, 2018). Therefore, raise in
employment rate will be challenging for employers in terms of making payment of higher costs
while on the other side, reduction in employment rate will be challenging to society.
In respect with the signalling model of education that states that, an individual pay
differentiated amount for the level of education. Thus, high cost education brings the less
productive efforts from workers. Similarly, low cost education brings highly productive
employees (Aragón, Rud and Toews, 2018). Moreover, people spend much on education brings
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them ability to serve for the higher posts at job while low cost education will require an
individual to make more efforts.
Empirically-Oriented question
1. a) Calculating gross rate of return
Gross rate of return =
Formula:
Ending value – Beginning value *100
Beginning value
Aged 25-29 graduates
= (Median – 10th percentile) *100
10th percentile
= (12.36- 7.05) *100
7.05
= 75%
= (90th Percentile – Median) *100
Median
= (23.08 – 12.36) *100
12.36
= 87%
Aged 30-59 Graduates
= (Median – 10th percentile) *100
10th percentile
= (17.31 – 8.45) *100
8.45
= 105%
= (90th Percentile – Median) *100
Median
= (34.63 – 17.31) *100
17.31
= 100%
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Rate of return
Graduates Aged 25-29 Aged 30-59
10th percentile
Median 75% 105%
90th percentile 87% 100%
In relation with analysing the gross rate of return for both age categories and the rates they
have been hourly payable. On the basis of which it can be said that, Graduates of aged between
30-59 are comparatively more capable of bringing the adequate returns on their studies. Thus,
investing in education will bring the higher returns after a certain period.
b) Analysing the variation in the rate of return for the employees performing in two different
groups
In respect with ascertaining the variations in the wages of employees located at different
places and age groups. Thus, these changes have been based on the proportions level of
employees which are graduated and school leavers as per their ages. As per 30-59 age group
population there are higher employment rates for the graduates which are earning comparatively
higher revenue than age between 25-29 (Pearson, 2018).
2. a) Determining the reason behind inaccurate outcomes through data base
There has been reason behind the inaccurate outcomes from the data base which is due to
consideration of the short period and small data base to analyse the outcomes. Along with this,
the age factors and the data base have been collected was not appropriate and adequate as per
making favourable study over such variations.
B) Ascertaining the reason regarding higher employment rates
The reason behind higher employment rate in graduates is basically due to requirement of
employer. The growing economy requires implication of highly configured technology which
will requires skilled and talented employees for the operations (Akinwale, Akinbami and
Akarakiri, 2018). Thus, level of education defines knowledge and talent in individual which
helps in creating job opportunities and due to that, there is higher proportionate rate of
employment in graduates from both age group.
As per considering the social rate of return which is the rate on which society will have
retrains on their investment in education. It can be relevant with the cost their bare for education
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and returns they have after it such as through their jobs and employment in any field. Moreover,
it must be positive of more than zero.
Policy based question:
1. What are the impacts of making advance policy for encouraging the best educational
interest among students?
2. How reliable these policies are in terms of achieving the goals and mission?
3. What are the expected changes which will be incurred after implication of advanced
policies in education?
Policy Related Questions:
Human capital and Signalling explanations
There have been workers which are comprised on higher level of education are
comparatively less in number in any organisation. Thus, people with less educational knowledge
are comparatively higher in the organisation. The highly educated employees are innovative,
talent, skilled and beneficiary for the long-term growth of the industry. On the other side, less
educated employees are capable of making higher efforts and potential with reference to make
adequate production which raises the profitability of the organisation.
Moreover, in respect with the signalling theory it can be said that, the large number of less
educated employees will affect the financial stability in the firm such the salaries and wages
expense’s will be higher. Similarly, highly educated employees are less in number but they
require higher salaries as per their posts and qualification they have hold. There can be various
reasons of such differences in the education and the level of payoffs retained by them. It is
basically due to poverty and affordability of higher education fees in university among people.
To improve the employment rate in UK there will be requirement of considering the social
rate of return which is required to be equal and more than Zero. The outcomes will be favourable
which will be true indictors to the economists in analysing the economic growth of education
sector.
Recent changes in financing higher education in UK
In respect with analysing the social rate of return where graduates have been awarded
effective pay-offs than compared to the school dropouts. It can be said that, rising the education
level as well as encouraging people to complete their graduation will be helpful to them in
mitigating economic barriers. Thus, which will increase financial gains to the businesses.
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Seminar sheet 8: Labour market inequalities
1. Analysing impacts of skilled biased technology affects labour market of unskilled workers
with reference to demand and supply curve
There have been impacts of the changes incurred in the skilled biased technologies which
will affect the employment opportunities for the skills and unskilled employees in a
manufacturing unit. Thus, use of machineries, robotic rams as well as computer based
operational influences which will have impacts on the employment rate in such sector (Forder
and et.al., 2018). The skilled employed will have enough knowledge and talent to analyse and
understand the technical reform. On the other side, unskilled employees are less capable in
learning and understanding the things which creates obstacles in adaptation of new technologies
for the business.
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In relation with analysing the impacts of such technical variations which have been used by
producers in manufacturing units belongs to advanced economy. There is chances of having
higher number of technically improved gadget’s as well as skilled employees in the developed
nation.
As per analyzing the diagram which have present that there has been reduction in the
demand of unskilled workers as the firm cannot bare the costs of hiring the non-potential of
unskilled workers. It affects their growth, economy as well as productivity. On the other side,
there will be rightward shift in the demand curve for skilled workers. Thus, there are always
being higher demands for the potentially skilled workers which is worth the costs implicated by
organization on them.
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2. Identifying the impacts of increased international competition in manufacturing sector affects
labour market for unskilled employees
In relation with analysing the impacts of skilled technology over the employment rate of
the unskilled employees are drastically affecting their earning capabilities.
 Technical influences in the manufacturing unit replaces the number of Labour forces
which have been enacted by producer to reduce the costs (Crépon and et.al., 2018).
 Robotic arms are comparatively more efficiency, accurate as well as cost efficient for the
business on the long-term basis.
 It has direct impacts on the employment rate of nation as well as affects the job
opportunities for the unskilled employees.
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