Question

In: Economics

whatare labor market advantages?

whatare labor market advantages?

Solutions

Expert Solution

It would make businesses more effective and more profitable. Flexible labor markets allow businesses to hold prices down. Companies may get rid of the excess staff, for example. This can help keep the company from going bankrupt in the long run and saving employment. With globalization, it is increasingly important for businesses in the global economy to stay profitable. Expanded trade. With lower labor costs a rise in production and exports may occur. Normal unemployment could be lower, and inflation could be lower.

Greater choice. Most people would choose diverse forms of jobs as it suits their preferences and provides a broader option. Higher level of labor force participation. Flexible labour markets have played a role in rising the level of female participation. Multinational businesses may be drawn to invest in countries with more competitive labor markets, firstly generating employment.

Lower chronic unemployment rates. Countries with stringent labour market policies, like France and Spain, have historically suffered higher systemic unemployment rates. The UK and the US have seen a lower normal rate of unemployment and more stable labour markets. The economic cycle is stabilizing. A stable labor market can be resilient to additional labour (e.g. expanded net migration) during boom periods. Net migration declines during boom times, thereby reducing the increase in unemployment.


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