Inequality and Mobility in Terms of Income - Essay Example

Week 6: -Describe inequality and mobility in a comparative context. Inequality and mobility are related and should, therefore, be evaluated jointly. The utility of employee depends on their current earnings and on the likelihood of their future changes in income. Most people view labor unions as an exceptional group, since they assist in enhancing economic distribution and evaluate the welfare of the employees. However, as much as labor unions ascertains that the welfare of the employees is preserved, they also create inequality between the two similar workers, by elevating wages in the union sector and depressing it within the non-union sector. If there is inequality between the identical workers, this means that those working in unions are more skilled which increases inequality because these workers are more knowledgeable than the non-union workers. The strong relationship between unions and inequality attracts great interests and analysts struggles to illustrate increase in labor inequality in most industrialized countries. This has been a great challenge in countries that experiences high levels of geographical mobility, with rate of competitive labor markets. -Explain how mobility is measured Mobility is measured in terms of income earned and the rate of employment. When the low income earners search for new employment opportunities, this increases the level of labor mobility, and on the other hand, when the unemployment rate is high, this increases geographical mobility. -Debate the importance of inequality and mobility as measure of social welfare Inequality and mobility in the context of social welfare is significant since it creates dependency between individuals and nations and, therefore, improving their relationship. Week 7: -Define externalities, explain and diagram their effects on a market Externalities are common aspects in almost every field of economic activity. They are referred as third party effects emanating from the manufacturing of goods and services without any suitable compensation considered. When there is negative production, the marginal social cost exceeds the private marginal cost as illustrated by the diagram below. In other aspects, externalities may result to market failure. In illustrating this, we assume that if a manufacturer is only interested in maximizing profits, then they only account for private costs and private benefits that arise from the product supplies. The diagram below illustrates that the level of profit maximization is at Q1. On the other hand, the social optimum output level is at Q2. -Define and explain public goods Public goods are those goods that are produced to be used by the society and are taxable. These goods are made available even to the creditors, and their production is unlimited. -Review the questions at the end of the Viscusi chapter Week 8: -Explain and diagram the effects of labor unionization on markets Unionization causes a significant change in the market besides its great influence on remunerations and employment. Labor unions prohibit employers from negotiating with employees that are unionized. Registered Unions act as collective bargaining representatives for employees. However, these trade unions may cause labour market failure, since they aim at enhancing the wage rates for the workers. While this benefits the Union members, on the other hand the market is tremendous affected. For instance, when Labour Unionization increases the wage rate, this may cause a great failure in the market because of high unemployment rate. Discuss the pros and cons of unionization Cons of Unionization Most people would prefer dissociating their businesses with Unions because of the following reasons: Unionization aims at increasing employee’s wages thus resulting to higher wage cost which affects demand and supply curves in the market. This may determine the failure or the success of the product. The employees enjoy high benefit costs which has a direct effect on the production. The high wage rates also results to loss of employment, because only skilled employees have the opportunity to work in unions. It also because complex and difficult to hire new employees and dismiss workers that were loyal and productive in the business though unskilled. There is also a need for collective bargaining and contracts with workers that are willing to be unionized. Finally, there is a likelihood of low productivity and strikes from the employees. However, unions may also have a positive impact in the organization by improving the corporate productivity, reduction of employee turnover, boosting the business profitability and also cutting down states and federal costs on unproductive employees. Discuss unionization trends and the comparative perspective Trade unions are implementing new trends that seem to protect the welfare of the employees rather than the businesses. They are ensuring that employees experience a continued increase in wage rate in order to counteract with the low level of living standards. This trend ascertains that even when the prices of products increase, the employees are a better position and enjoys the wages without any hassles. Review the questions at the end of the Ehrenberg and Smith chapter Week 9: -Explain rationality in the economic context Rationality occurs when customers gather correct information about the price of a product and its competitive aspect, and then make a decision based on the best price. -Be able to solve simultaneous games for Nash Equilibria (pure strategies only – no probabilities) -Be able to solve sequential games for Nash Equilibria It is very significant to understand sequential games because it assists business person(s) apply the canon of thumb technique and statistical evaluation to situations. Week 10: -Discuss the debate between liberalism and dependence theory in the context of international trade Dependency theory discards liberalism with the assumption that the latter leads to inequality. According to dependency theory, the wealth nations depend on the developing nations to expand their growth. It, therefore, implies for a country to develop and grow it must depend on each other. The developed countries relies on the developing countries for goods, while as the developing nations depends on the wealthy nations for finances. -Review the questions at the end of the Kenen chapter Research Methods: -Understand the strengths and weaknesses of qualitative and quantitative research Qualitative and quantitative research methods are complementing and also contrasting. Therefore, it is pretty good to understand the strengths weaknesses of each method in order to make a decision on the best method to use in collecting data. For instance, most analysis considers quantitative research method because it contains concrete statistical data that is considered valid and reliable for conducting research. -Explain what methods would be best for a given problem and how you would conduct an analysis Quantitative data is the efficient method for conducting the analysis because it uses hard statistical data. Works Cited Atherton, Wallace. Theory of Union Bargaining Goals. Princeton, N.J.: Princeton UniversityPress, 1973. Read More