Login with Facebook

Government's Intervention in The Labor Market

The labor market is the biggest market in any economy. Forget supply and demand; if there is no labor, then such an economy has no future. Besides, it is the only market that is found in every other market. So, what is the labor market exactly? One may ask. The labor market is simply the market that provides workers for all production lines. For a company to be successful and go anywhere, there needs workers who are qualified enough to provide the labor they need. If they don't get these workers, they have no way to ensure their business's success. In any other market, firms are the suppliers, and households are the consumers. But things change in the labor market where households become the supply, and the firms are consumers. In other words, companies offer demand.

A private firm will always come up with its own employments policies and agreements between them and their employees. They determine how to employ workers, and in many cases, fire them based on different cases. Creating a good relationship between a firm and the people that run their production lines is one of the best ways to ensure success.

Despite it being a private issue, there are many instances where the government intervenes in the labor market. First, there are certain jobs that the government provides for public servants, who are elected or employed to serve the common citizen. In more developed countries, the government is the largest contributor to the labor market. They employ more people than the private sector.

Unemployment is one of the biggest threats to economic growth and development. Hence, a government needs to ensure that there are proper laws a guideline on how people are employed, paid, and or fired. Without these policies, many economies would not go far, and governments would fail. Therefore, it is always a good idea to have some form of intervention that ensures this crucial market is always in check.

Economic studies put an emphasis on the topic of government intervention and the labor market as a crucial part of discovering better ways to make the labor market profitable. Where the labor market is not well catered for, the government will have a hard time giving its citizens the services they need. And in this section, we are going to discuss how the governments intervene in this market and why they must do it.

Let's look at the case of the European market. The employment and unemployment experience here varies largely from what happens in the United States. There are different sources of these differences, as you will see by the end of this discussion, which may also help you understand why the labor market is such a big deal in the whole world. We will also be extending into the impact of the market in these two regions. The aim here is to help you understand how different economies are related in terms of the labor market and government activities in these areas.

Why do Governments Intervene in the Labor Market?

In Europe, government intervention in how people get jobs and how firms employ is a common area. For instance, there are so many examples of restrictions on hiring, firing, closing companies, and many other things that relate directly to firs' operation. There are some restrictions that are much similar to what happens in the USA, but not as much as what happens in the European region. One main reason for this phenomenon is that public opinion highly supports such restrictions than they do in the US. Consider this French example, that in 2003, food producer Danone wanted to close two of their factories in France that were not profitable. Such a step would not have been accepted in the US either, and it led to massive protests and other serious factors, including the condemnation of politicians. One would wonder why such a private firm's affair would involve politicians, yet they were not involved in setting up the businesses. Well, it all comes down to the region's economic growth and how workers should be protected against exploitation. The government comes in to ensure proper laws are followed, and whenever possible, offers a better solution to the problem.

It is not only in Europe, where government intervention affects the labor market directly. You will realize that many other parts of the world have these regulations in place. Policymakers are always trying to make sure there is a balance between labor providers and consumers. For instance, China has recently started considering labor regulations very seriously. On June 30, 2007, the New York Times reported in one of their headlines that, "China Passes a Sweeping Labor Law." In this new labor contract regulation passed by the Standing Committee of the National People's Congres, employers are required to give written contracts to their workers. It also puts a restriction on temporary workers' use while making it hard for firms to fire workers as they will.

This came as good news to China's labor market, especially because most workers do not belong in any labor unions. Therefore, the government comes in as a savior, stepping to protect those working in the public and private sectors. There is a huge need for this intervention, mostly because it increases the share of privately owned firms, rather than the government's, which is crucial to the Chinese economy's growth.

Many other parts of the world have been following the same footsteps by creating laws that protect the labor market and many private firms and form collapse. We have seen cases where monetary policies have been employed in reviving economies. The government may decide to give a financial boost to a firm that is on the verge of collapse to revive its operations. We have seen how economic stimulus programs have effectively secured the labor market, apart from offering something more to keep other markets in operation.

Government Policies in the Labor Market

In a nutshell, government policies are a key factor that influences the functioning of the labor markets. And we have seen how these policies differ or relate to different economies. Economists and policymakers hold that these ideas are good to keep a steady economy while creating a good environment where firms can relate well with their workers. But we cannot conclude without looking at how these interventions come into effect. The idea here is to make sure you understand the idea and what rights a person in the labor market enjoys. We will, therefore, look at some of the policies applied.

Unemployment insurance

Unemployment is one of the biggest factors that affect/determine the rate of economic growth. If a government does not put in place properly on employments contracts, chances of falling into trouble are very high. And the economy is seen to be successful when it enjoys the lowest rate of unemployment. When people have a job, they consume products and pay their taxes, which helps the government run smoothly. But where they are not working, it becomes hard to create a good economic environment, as they will be saving more and spending more. Therefore, it is crucial to create a flexible market where people are free to change jobs, especially because many people spend at least some time out of employment.

However, this is only what an economist may say. Even for a short time, losing jobs is a normal aspect of everyday life for many people, which sees them lose their livelihood. When there is a relocation of jobs that benefits the economy, it affects individuals in ways they may never have imagined. It has even caused some people to run into mental issues because they did not know where to start. When firms fall, and people certainly lose their jobs, it is never good for their families. And in many cases, securing another job may not be very easy. It may take many months for them to get back on track, a situation that does not always end well.

Conclusion this is one of the main reasons developed economies have created unemployment insurance to protect the labor force provider. This policy means that anyone who is not employed can register to receive some income from the government. How much one receives depends on where they live and the policies that guide these funds' allocation. The USA is one of the leading economies with such laws, and they vary depending on the state where one resides.

Unemployment insurance is not like buying a car, home, or life insurance. This is because individuals decide for themselves how much they want to invest and when to do it. Private companies offering insurance rely on the fact that not everyone may file a claim at the same time. For instance, car insurance companies know that perhaps only 20% of the cars they have insured will get involved in accidents within a certain period. Things are different from unemployment insurance, where an economic recession can lead to many people losing their jobs and applying for a claim. And the amount you receive, for instance, in the USA depends on how much you have earned over the past year.

We can, therefore, conclude that unemployment insurance contributes to flexibility in the labor market. But then, it is not easy to determine how much unemployment insurance should be offered. If the offer is very generous, then there will be no need for people to work. Therefore, the government puts restrictions on the period of time one has to wait before collecting the insurance fee to incentivize them to look for employment.

The cost of firing workers

If you are a human resource manager of a certain firm in the US and realize that the firm does not supply as much as it should due to poor demand, one of the best ways to cut down on costs is laying off some workers. But did you know that you cannot do this without giving them two weeks' notice? For some companies, this will mark the end of your obligation. However, in many cases, the firm will have to pay the worker their severance payments, as indicated in their employment contracts. Besides this, there must be valid reasons why the worker should be laid off. You cannot, for instance, fire someone based on reasons of discrimination.

Even though employment contracts are usually private matters between firms and their employees, the government may intervene where one is wrongfully dismissed. For instance, HR managers cannot fire a worker for whistleblowing. In some countries, things are much different, and perhaps easier for HR managers than it is in the USA. Generally, certain firing costs discourage private firms from laying off workers quickly, which increases employment and boosts the general economy.

Incentive effects

Making the taxation system progressive comes with a lot of risks. Many people know and agree that the income tax needs to be progressive. However, sometimes the tax rates are too high, affecting people who offer additional effort or labor. Highly skilled and highly paid jobs may be affected even more. The governments need to react with policies that improve such situations to keep people working harder.

Minimum and Maximum wages

Governments make policies that determine the minimum wages workers should receive in certain markets. The national minimum wage is what every working person is entitled to earn even before skills and benefits.

Trade unions

Association of workers negotiates with employers of the working conditions of their unions' working conditions and how much they should be paid. They get involved majorly in wage bargaining, improving working conditionsGovernments Intervention, and ensuring their members' health and safety. They seek to affect the labor market equilibrium. Governments set in place conditions under which such unions should operate.

The government has the largest role to play in the labor market. The economic theory insists on good relationships between producers and consumers within a market setup. The government tries to ensure that there are smooth operations that assure economic development and keep the people in good living conditions.

Author: James Hamilton

Need a custom

We will write it for you.
Order now

Free Essay Examples

Free essays:

All you need to know about Neuroendocrinology
All you need to know about Big data management
All you need to know about digital special effects
All you need to know Technical Writing?
Basics the Game Theory in Cryptoeconomics
Business innovation ideas for making money
Biosensors for cancer diagnosis
Business Analysis: Pricing strategies and Demand Curve
Cognitive Computing- How does Cognitive Computing work?
Consciousness: characteristics and peculiarities
Conservation Economics
Cybersecurity in business: challenges, risks, and practices
Demographic trends and how they affect Economic Growth
Dance as an art form and entertainment
Discrimination Economics
Determinants of Wages
Everything you need to know about short-term memory
Economic and Policy Impacts of Demographics
Ethics: an essay on the understanding of evil
Emotions: what are they? Theories explained
Factors of Demographic Data Collection
Factors Affecting Purchasing Behavior
Financial Statement Analysis
Factors Influencing Interest and Exchange Rates
Government's Intervention in The Labor Market
Guide on the Pathways of the nervous system
Game theory in microeconomics
Globalization: definition, causes, social impact and risks
How Relativism Promotes Pluralism and Tolerance
How to use the audience’s feedback to write a news report
History of silent cinema
How news report can be strengthened through multimedia
Introduction to Population Problems
Imperfect Information and Asymmetric Information
Imperfect Information in Insurance
Introduction to Labor Markets
Journalism: What is News?
Journalism: Broadcast media and Television Presenters
Journalism: Sources of News
Journalism and Law
Key Determinants of National Income
Key Factors That Affect Pricing Decisions
Kinetic models in biology and Related fields
Know about the different forms of traditional African dances
Latest technology trends
Latest dance trends
Magnetoencephalography (MEG)
Microeconomic Analysis to the Demand for Labor
Neuromuscular disorders
National Economies, Fluctuation, and Responses to Fluctuations
Neurotransmitters: what they are and different types
Nanomedicines to target tumors
Objections to utilitarianism
Organizational motivation and its effects
Overcoming Hiring Challenges for Nonprofit Organization
Population Demographics
Recurrent neural networks (RNN) for speech detection
Russian School of Mathematics
Research and Development
Risk Sharing in Insurance and Asset Markets
Stochastic optimization methods in deep learning?
Structure of the nervous system
Structure of a Corporation
Schizoaffective disorder: how to live better with it
The climate change denial
The techniques of basic cinematography
The Endosymbiotic Theory
The Role of Internal Audit in Corporate Risk Management
Utilitarianism Vs. Kantianism
Understanding Auctions and Auction Theory: Part 2
Various theoretical perspectives of sociology
Virtual reality, what it is and how it works
What are the linear models in machine learning?
What is Convolutional Neural Network
4 Facts about Origin of Mathematics!
5 techniques to create an animation
10 emerging technologies according to World Economic Forum
10 strategies to maximize corporate profits
3d Model Of Building
6 Medical Technologies that revolutionized the healthcare in 2020
All you need to know about the ACA Code of ethics
Architecture and Democracy: An Introduction
Architecture and Democracy: Democratic Values
Architecture and Democracy: Democratic Procedures
All You Need to Know About a Synthesis Essay
An essential guide to understanding Film Theory
Application of Artificial Intelligence in Cyber Security
Applications of electrical engineering
Augmented reality: what it is, how it works, examples
Advantages And Disadvantages Of Social Networking
All you need to know about Cryptography
Applications of astrophysical science
All you need to know about architecture engineering
Applications of geological engineering
Artificial intelligence and medicine: an increasingly close relationship
An insight into Computational Biology
ACA code of conduct
A Rose for Emily
Applications of Mathematics in daily life
Architecture mistakes to avoid
All you need to know about Toxicology
All you need to know about Holistic Medicine
All you need to know about linguistics
An introduction to Linguistics and its subfields
All you need to know about Anxiety disorder
All you need to know about Drones
A Brief Insight into Political Science
Assumptions related to feminism
All you need to know about Byzantine emperors
All you need to know about labour economics
An insight into xenobots -the first-ever robots
An ultimate guide about Biomaterials
A Comprehensive Introduction to the Mona Lisa
Analysis methods of Transport through biological membranes
An ultimate guide about biochemical reactions
Analysis of brain signals
Artificial Gene Synthesis
Application to synthetic biology of CAD methods
All you need to know about metabolic pathways
Applications of BIOMEMS
All you need to know about the epidemiology
Asian vs. western leadership styles
All you need to know about Smart prosthesis
Analysis of Economy: Output of Goods and Services (GNP), and GDP on Economic success
A Guide to Pricing Strategies
An Overview Of Economic Studies
Analysis of Fiscal and Monetary Policies
Analysis of Business Cycles
Analysis of Consumption and Investment
A Look into Regression Analysis
Analysis of Household's Consumption and Savings Behavior
All you need to know about Capital Budgeting
All you need to know about risk management
Art looted in wartime.
Appropriate use of Data in Economics
All you need to know about reaction kinetics?
A historical overview of Financial Crises
All you need to know about management discipline?
An insight into the error-correction models
All you need to know about Data visualization
All you need to know about Work-family balance
All you need to know Technical Writing?
All you need to know about digital special effects
All you need to know about Big data management
All you need to know about Neuroendocrinology
How to Write a Personal Essay
Housing Needs in America
How to Write a Description Essay
How to Create an Excellent Scholarship Essay?
How to write a cause and effect essay
How to Hire the Best Essay Writing Service Provider?
How to Write a College Application Essay?
How to get the most out of your English lectures
How to write Expository Essay
How to succeed in your psychology class?
How to Write an Academic Essay in the Shortest Time?
History of Journalism
How Different Sectors are Using Artificial intelligence (AI)
How to write an informative essay
How to deliver persuasive essays?
How to Give a Convincing Presentation
How to write an essay on leadership?
Historical Art Still Around Today
Humanoid robot: what it is, how it works and price
History of Chemistry
Healthcare Advanced Computer Power: Robotics, Medical Imaging, and More
Healthcare AI: Game Changers for Medical Decision-Making and Remote Patient Monitoring
How to understand different types of English
How to Cope with Chronic Pain
How African American choreographers and dancers have influenced American dance
How mobile robot can do in logistics or in production
How To Become a Successful Entrepreneur
History of the Philosophy of Feminism
How is the climate changing?
How to Track Your Content Marketing ROI
How to Gun control In the USA?
Historical and contemporary role of labour in the modern world
How breast cancers are classified?
How the cells of our body communicate?
How the Lymphatic System Works?
How Digestive System Works
How to complete your capstone projects effectively?
How to write a research project
Healthcare technologies that help patients with better self-management
How to choose the topic of the senior capstone project
How to make your business survive at economic crisis
How can immigrants blend in the American society?
How does the economics of war affect society?
Hate speech on social media.
How to Build an Economic Model
How to start a healthcare startup?
How can financial illiteracy harm you?
How cancer is developed - Cancer biology
How to define the Enterprise Value
How to conduct economic research?
How women can manage sexual harassment
How to use quotes in your news reports?
How news report can be strengthened through multimedia
History of silent cinema
How to use the audience’s feedback to write a news report
How Relativism Promotes Pluralism and Tolerance
Introduction to Urban Studies
Importance of dance in education
InMoov: how to build an open source humanoid robot
Importance of KYC verification to making the Blockchain secure
Importance of Rhythm
Importance of dance student evaluation
I/O control methods -types and explanations
Identity theft: what to do?
Introduction to Utilitarianism
Importance of 3d Modelling in Architecture
Importance of online journalism
Image processing in medical diagnosis
Introduction to USA Politics
Introduction to Comparative Politics
International Relations as a Major in Political Science
Importance of modern trade policy
Introduction to Journalism
Introduction to Writing a TV Script
Introduction of Microfabrication techniques
Introduction to Microeconomics
Interaction of Consumer and Firm Choices in Markets
Importance of corporate sustainability
Issues in International Monetary Macroeconomics
Introduction to Statistics and Data for Economics
Introduction to Data and Probability for Economics
Introduction to the Game Theory
Introduction to Econometrics
Introduction to Economic Information
Introduction to Market Equilibrium
Introduction to Economic Models and Application
Introduction to Empirical Research
Introduction to Econometric Data
Importance of Critical Thinking, Principles, and Goals
Introduction to Identification and Causal inferences
Introduction to Econometric Application
Intermediaries and Government in Financial Crisis
Importance and seven principles of quality management
Illiteracy in the USA
Introduction to Economics of Law
Introduction to Coase Theorem
Introduction to Social Choice and Incarceration
Intellectual Property and Product Liability
Investment in Human Capital
Introduction to Labor Markets
Imperfect Information in Insurance
Imperfect Information and Asymmetric Information
Introduction to Population Problems
The Looming Energy Crisis in America
Top benefits of performance-based engineering
The More Languages You Know, The More Times You Are a Man
Things to consider while writing an Argumentative Essay
Top Ways to Improve Your Academic Writing Skills
Tips to Excel in Creative Writing
The origins of films in the early 19th century
Top career options in Architecture
The Elevator Pitch
Top finance trends 2020
The basic Structure and functionality of robots
The Way to Success
The election system of the President in the United States of America
Two-party System in United States of America
Top trends in urban design
The history and theory of African American filmmaking
Top benefits of creative writing
Tinnitus Guide: Common Symptoms and Treatment Options
The language of dance
The digital image processing management
Top famous politicians of the World
Top methods of political science!
The history of the feminist movement
The blood flow in cardiovascular system - Biofluid Mechanics
The best of Leonardo Da Vinci
The Structure and Function of Macromolecules
The structure of cell: a research on the bricks of the human body!
Tissue and organ construction: Adhesion and recognition between cells
The kinetics of the transformation processes
The Modeling of Biological Systems
Tips for writing a great thesis statement
The Defense mechanisms against infections
The impact of the technological innovations in medicine
Top journalism trends to know about
The relation between mass media & politics
Theranostics: Diagnosis and Care through Nanoparticles
The practical Applications of X-rays
The applications of Ultrasound in medicine
Transfer mechanisms of genetic information in Bacteria
The regulation of cellular metabolism in the diagnosis
The Principles of MRI Contrast agents
The technical basis of optical coherence imaging
The New Media: Emerging Trends
The Structure of Interest Rates and the Yield Curve
Technological perspectives and reflections of neural engineering
Types of bioreactors and their applications
The Role of Government Policy in Improving Economic Outcomes
Types of corporate responsibility
The Role of IMF in International Monetary Macroeconomics
Tools for investment decision making
The concept of Organizational Culture and its applications
The Conduct of Monetary and Fiscal Policy
The Basics of Financial Accelerator Models
Tips for labeling medical devices- Medical Entrepreneurship
The different medical imaging techniques
The Economics of Uncertainty – Introduction
Theories of Public Policy
The Game Theory in Social Media
The political theory of Thomas Hobbes
The Use of Law on Economics and Vice Versa
The Role of Internal Audit in Corporate Risk Management
The Endosymbiotic Theory
The techniques of basic cinematography
The climate change denial
What is a Definition Essay?
What are diagnostic essays?
What is the relation between art structural engineering?
What is a Narrative Essay
What are robotics and intelligence systems?
What are the benefits of studying health sciences?
What is artificial intelligence and why it matters?
What is comparative Literature?
Why study neuroscience
What is Wi-Fi and how does it works
What is French history famous for?
What are Humanistic Studies?
What is covered in Biophysics?
What is modern journalism?
What is Virtualization? Benefits & Applications
What are modern public relations?
What is plasma physics?
What is teacher preparation?
What is rapid prototyping for 3D printing?
What is contemporary European Politics?
Why should you learn American Ballet?
What is engineering physics?
What is the purpose of African American Literature?
Ways to learn the Rhythm
What is digital art used for?
What are Enzymes and how do they work
Who is the father of political science?
Why Study Political Science - Job?
What is the Philosophy of Feminism?
What is a quantum computer?
Ways B2B Startups Streamline Their Conversion Strategies
Why do biomedical signals need processing?
What are the long term effects of climate change?
Why study labour relations
What is Holoprosencephaly?
What is antisocial disorder?
What are the important principles of evolution?
What is the cytoplasm and its function?
What is biopolymers?
What Makes a Good Leader
Women empowerment in modern generation
What is the history of political thought?
What is Gene recombination
What is synthetic biology
What is business cost analysis?
What is Inflation
What are the consequences of unemployment?
What is lithotripsy and its types?
What is transition elastography?
What is the purpose of deep brain stimulation?
What is a Brain-Computer Interface (BCI)
What is neuroethics?
What is Market and Supply and Demand
What is optogenetics?
What are the techniques to record brain activity?
What happens if the interest rate increases?
What is immunotherapy?
What is the economic role of the financial market?
What are the factors behind illegal immigration?
What is the lymphocyte activation?
What is financial market and its types?
What is the structure of financial markets?
What are the methods of measuring business performance?
What is the Credit market?
What is business ethics and code of ethics
What are the Causes of financial instability?
What is MBA with Concentrations
What is regenerative medicine?
What is Population ecology?
What is Microfinance: evolution, and practices?
What is biotechnology and its applications?
What are Workplace diversity and its benefits?
What is the difference between a leader and a manager?
What Is Branding and best branding Business strategies?
Why are microelectronics important?
What are biologic drugs.
What is the Foreign Exchange market?
What is the role of scientific research in times of crisis?
What are the risks of international trade?
What is financial management?
What is gene therapy?
What is education economics?
What is regression analysis, and why should you use it?
What Is Technology Marketing And How Should It Work?
What is Management Accounting
What are the methods of valuation of companies?
What is Immune System and Immunotherapy?
What is big data analytics?
What is the 7 layers of OSI model?
What is Neuroplasticity?
What are Sculpture art and its types?
What are the different genres of films?
What is Transcranial magnetic stimulation (TMS)?
What is TES-Transcranial electrical stimulation?
What is Relativism?
What is Vaccine skepticism, and what to do about it?
What happens in the brain when learning?
What is the deep neural network?
What is Convolutional Neural Network
What are the linear models in machine learning?