Every Question that could be
possibly asked in Economics A-
level Edexcel A
Microeconomics
Discuss the likely impact of migration on employment and unemployment in the UK.
1. Impact on Employment:
Likely Impact: Migration can contribute to an increase in employment in the UK by
filling labour shortages in various sectors of the economy. Immigrant workers often
take up jobs that domestic workers may not be willing to perform, particularly in
industries such as agriculture, construction, healthcare, and hospitality.
Example: In the agricultural sector, where seasonal labour demands fluctuate,
migrant workers often play a crucial role in planting, harvesting, and processing
crops. Their availability helps ensure that agricultural businesses can meet
production targets and maintain their competitiveness in domestic and international
markets.
Evaluation: While migration can boost overall employment levels by addressing
labour shortages, there may be concerns about the potential displacement of
domestic workers or downward pressure on wages in certain sectors. However,
evidence suggests that the net impact of migration on employment in the UK is
generally positive, with immigrant workers complementing rather than replacing
domestic workers.
2. Impact on Unemployment:
Likely Impact: Migration may have a mixed impact on unemployment in the UK,
depending on factors such as the skill levels of immigrants, their integration into the
labour market, and the overall state of the economy. Skilled immigrants with in-
demand qualifications and experience may help fill gaps in the labour market and
reduce unemployment rates.
,Example: In industries facing skills shortages, such as information technology,
engineering, and healthcare, migrant workers often contribute to innovation,
productivity growth, and job creation. Their presence can lead to the expansion of
businesses, the development of new products and services, and the creation of
employment opportunities for both native and immigrant workers.
Evaluation: While skilled migration can help alleviate unemployment by addressing
skills gaps and stimulating economic growth, concerns may arise regarding the
impact of low-skilled migration on native workers in sectors with high levels of
competition for low-wage jobs. However, research suggests that the overall effect of
migration on unemployment in the UK is modest, with any negative effects offset by
positive contributions to economic activity and job creation.
3. Regional Variations:
Likely Impact: Migration may have differential impacts on employment and
unemployment across different regions of the UK. Urban areas and regions with
vibrant economies and diverse industries may experience greater demand for
immigrant labour, leading to increased employment opportunities and lower
unemployment rates.
Example: Cities like London, Manchester, and Birmingham, which attract large
numbers of migrants due to their economic opportunities and cultural diversity,
often benefit from the contributions of immigrant workers to various sectors,
including finance, technology, education, and healthcare.
Evaluation: While migration can bolster economic activity and employment
prospects in urban centres and prosperous regions, it may exacerbate disparities
between regions with high levels of immigration and those experiencing economic
decline or stagnation. Policymakers need to address regional imbalances and
ensure that all areas of the UK can harness the benefits of migration while
managing any associated challenges.
4. Policy Considerations:
Likely Impact: Government policies and regulations regarding immigration can
influence its impact on employment and unemployment in the UK. Well-designed
,immigration policies that prioritize skills, education, and integration can enhance
the positive contributions of migration to the labour market while mitigating
potential negative effects.
Example: Points-based immigration systems, such as the one implemented in
Australia, allow governments to select immigrants based on factors such as
education, work experience, language proficiency, and job offers. Such systems can
help ensure that immigrant workers possess the skills and qualifications needed to
fill specific labour market gaps.
Evaluation: Effective immigration policies that balance the needs of the economy
with concerns about social cohesion, integration, and labour market dynamics are
essential for maximizing the benefits of migration while minimizing its potential
drawbacks. Policymakers should engage in evidence-based decision-making and
consult with stakeholders to develop comprehensive immigration strategies that
support economic growth, social cohesion, and the well-being of all residents in the
UK.
Evaluate the likely costs of a monopsony operating in a market such as
supermarket industry.
1. Wage Suppression:
Knowledge: A monopsony in the supermarket industry has the power to suppress
wages below the competitive level.
Analysis: As the sole or dominant buyer of labour in the market, the monopsonistic
supermarket firm can dictate wages to workers, paying them less than they would
receive in a competitive labour market. This means that the firm can hire labour at
a wage lower than the marginal productivity of labour.
Example: In a small town where a single supermarket chain is the primary
employer, it may have significant influence over local wage rates for grocery store
workers. The firm could pay wages below what would prevail in a competitive
market, leading to lower incomes for workers.
Evaluation: Wage suppression by a monopsony reduces the earnings of workers,
leading to income inequality and potentially reducing workers' living standards. It
also leads to a misallocation of resources, as workers may be deterred from seeking
employment in the affected industry, resulting in inefficiency in labour allocation.
, 2. Reduced Employment:
Knowledge: Monopsonistic power can lead to a reduction in the quantity of labour
employed compared to the competitive outcome.
Analysis: The monopsony faces a marginal labour cost (MLC) higher than the wage
rate due to the need to increase wages to attract additional workers. This leads to
the firm employing fewer workers than it would in a competitive market equilibrium.
Example: A supermarket chain with monopsony power may choose to hire fewer
workers than would be employed in a competitive market, even if there is
unsatisfied demand for labour. This is because the cost of hiring an additional
worker (the MLC) is higher than the wage rate.
Evaluation: Reduced employment by a monopsony leads to a deadweight loss in the
labour market, as there are workers who are willing to work at the prevailing wage
but are unable to find employment. This results in inefficiency and underutilization
of labour resources.
3. Diminished Worker Welfare:
Knowledge: Monopsony power can result in a reduction in worker welfare compared
to the competitive outcome.
Analysis: Lower wages and reduced employment levels mean that workers are
worse off under monopsony compared to a competitive labour market equilibrium.
Workers may experience lower incomes, job insecurity, and reduced bargaining
power.
Example: In regions where a single supermarket chain dominates the labour
market, workers may have limited alternative employment opportunities. This
reduces their ability to negotiate for higher wages or better working conditions,
leading to diminished worker welfare.
