How Education And Training Affect The Economy
February 25 2012| Filed Under » Economics, Post-Secondary Education, Young Investors Why do most workers with college degrees earn so much more than those without? How does a nation's education system relate to its economic performance? Knowing how education and training interact with the economy can help you better understand why some workers, businesses and economies flourish, while others falter.
See: Keeping Up With Your Continuing Education
As the labor supply increases, more pressure is placed on the wage rate. If the demand for labor by employers does not keep up with the supply of labor, then the wage rate will be depressed. This is particularly harmful for employees working in industries that have low barriers to entry for new employees, i.e. they do not have high education or training requirements. Industries with higher requirements tend to pay workers higher wages, both because there is a smaller labor supply capable of operating in those industries and because the required education and training carries significant costs.
The Advantages of Education to a Nation
Globalization and international trade requires countries and their economies to compete with each other. Economically successful countries will hold competitive and comparative advantages over other economies, though a single country rarely specializes in a particular industry. This means that the country's economy will be made of various industries that will have different advantages and disadvantages in the global marketplace. The education and training of a country's workers is a major factor in determining just how well the country's economy will do. The study of the economics of training and education involves an analysis of the economy as a whole, of employers and of workers. Two major concepts that influence the wage rate are training and education. In general, well-trained workers tend to be more productive and earn more money than workers with poorer training.
A successful economy has a workforce capable of operating industries at a level where it holds a competitive advantage over the economies of other countries. To achieve this, nations may try incentivizing training through tax breaks and write offs, providing facilities to train workers, or a variety of other means designed to create a more skilled workforce. While it is unlikely that an economy will hold a competitive advantage in all industries, it can focus on a number of industries in which skilled professionals are more readily trained.
Differences in training levels have been cited as a significant factor that separates rich and poor countries. Although other factors are certainly in play, such as geography and available resources, having better-trained workers creates spillovers and externalities. For example, similar businesses may cluster in the same geographic region because of an availability of skilled workers (e.g. Silicon Valley).
Employers want workers who are productive and require less management. Employers must consider a number of factors when deciding on whether to pay for employee training. * Will the training program increase the productivity of the workers? * Will the increase in productivity warrant the cost of paying for all or part of the training program? * If the employer pays for training, will the employee leave the company for a competitor after the training program is complete? * Will the newly trained worker be able to command a higher wage? Will the worker see an increase in his or her bargaining power? While employers should be wary about newly trained workers leaving, many employers require workers to continue with the firm for a certain amount of time in exchange for the company paying for training. Businesses may also face employees who are unwilling to accept training. This can happen in industries dominated by unions, since increased job...
...The Effects of Long-Term Unemployment on the U.S. Economy
Unemployment is an extremely serious and scary issue due to the effect it has on our current state of economy. As a student and a future graduate, I am extremely concerned with this subject. If the job-market situation does not change for better, unemployment can represent a serious issue for all students, recent graduates, and current unemployed workers. And can have a significant effect on socioeconomic conditions and therefore, economy itself.
When we look back at the history of the United States, we can see that there was only one short period of time when unemployment was virtually non-existent. As we were taught in this class, the only period when unemployment almost did not exist was during World War II. In order to support the war efforts, the United States government created jobs for anyone who wanted to work. That means that only one time in United States history the economy functioned on the line of the Production Possibility Frontier.
In the earlier chapters of this course, we were introduced to basic principles of economics and to the Production Possibility Frontier. The Production Possibility Frontier is a graphical representation of various combinations of the amounts of two commodities that could be produced using the same factors of production. When the point lies on the curve line of Production...
...to increased mobility of labor and capital between different economies. There has also been an increased role for multinational corporations and international bodies such as the IMF.
Globalization has been characterized by increased international trade. This has created several benefits for the UK. The law of comparative advantage states that there will be an increase in economic welfare if countries specialize in the goods where they have a lower opportunity cost. Globalization has enabled a reduction in tariffs and transport costs leading to cheaper imports. This increases the consumer surplus of UK consumers. It has also enabled a wider choice of goods and services, for example, supermarkets are now able to stack a wide range of fruit and vegetables throughout the year.
Although globalization gives a greater choice of goods and services, some have criticized globalization for an increased homogeneity of products. Critics argue multinational cooperatives have been able to dominate, leading to big multinationals pushing out smaller independent retailers to the detriment of local firms. For example, the growth of coffee chains like Starbucks have made it more difficult for smaller independent coffee shops, it may be due to other factors like out of town shopping centers; also small shops can still exist even with the process of globalization.
Globalization has enabled firms to benefit from greater economies of scale. Due to...
...demoralising effect that it can have clearly depends upon whether the period of unemployment is short term or long term. Short term unemployment may have no serious effect on an individual whilst long term unemployment can be devastating. According to the Labour Force Survey in 1998, over 26% of the people unemployed for more than a year were over 50 years of age. Many of these people believe that they are failing to find jobs because they are too old and a large number of older people have become reconciled to the prospect of never working again. A major problem, of course, is that as job searchers become more and more pessimistic about their chances of finding jobs become even more remote.
According to survey carried out by the Manpower Services Commission, many of the longer-term unemployed become bored, idle, lose their friends and suffer from depression. One respondent to the survey stated, “It is not just money. Work gives you something to do. I’m just wasting away.” There is also evidence of increase family tensions leading in some cases to violence, divorce and family break ups. Unemployment can also lead to homelessness, as in some circumstances building societies may foreclose on mortgage if repayments are not kept up. One can only speculate on the effect of long term unemployment on vandalism, football hooliganism and the crime rate in general.
In countries without adequate welfare provisions for the poor,...
...Running Head: ECONOMIC CRISIS: EFFECTS ON THE ECONOMY 2
The United States is obviously in a state of economic despair. This essay has supporting facts that prove the economy is definitely not on the mend. The public has been led to believe that this downward spiral is almost over. What will be proven in this paper is that foreclosure rates are still dramatically increasing and that the total in unemployment rates is deceiving. Without more jobs, consumers won’t see the gains in income needed to encourage them to spend more. The only thing that does seem to be on the rise is the amount of people seeking help for psychological distress which comes from losing their jobs. It is time for America to quit thinking about solutions to the economic crisis and start doing something about it.
Running Head: ECONOMIC CRISIS: EFFECTS ON THE ECONOMY 3
Economic Crisis: Effects on Society
We are in an economic crisis. These are words that all Americans have become increasingly familiar with these days. Some would say that our economy is on the mend. However, the facts tell a different story. Foreclosure rates are still dramatically increasing due to the number of unemployed individuals who remain displaced. Obviously consumers are spending their money more rationally; and, furthermore, the psychological state...
...Immigration and Its Effect on the Economy of the U.S
The 1990s have brought the largest influx of immigrants into labor force of the
United States of any decade in this nation's history. A panel of social science
scholars concluded their assessment of U.S. society with the observation that
"America's biggest import is people" and determined that "at a time when
attention is directed to the general decline in American exceptionalism,
American immigration continues to flow at a rate unknown elsewhere in the world"
[Oxford Analytica 1986, 20]. Unlike earlier mass immigration periods to the
United States the present day wave of immigration to the U.S. show "no sign of
imminent decline" [Bouvier 1991, 18]. "In today's world setting, international
migration is a discretionary action that is regulated by the specific actions of
the governments of individual nation-states." There is no international
obligation for any nation to allow others to enter or to work, in fact, most
nations do not admit immigrants for permanent settlement
Mass immigration has played a significant role in the economic history of the
United States, nevertheless the harsh fact is that what may be necessary and
beneficial at one time, may not be so at another. The demand for labor is being
affected by "restructuring forces stemming from the nature and pace of
technological change; from the stiff international competition the United States
that now confronts for the first...
Illegal Immigrants Are They A Stress On Our Economy. |
Joanna Przyborski |
Illegal immigration is an issue that has been highly debated in the United States for decades, and the effects of these immigrants will be for many to come, especially with the country in a recession and many people in economic trouble. December 1, 2008 the National Bureau of Economic Research officially declared the U.S. in a recession. Before 2007, U.S. economy has grown in 23 of the last 25 years. During this period, the U.S. attracted record numbers of new immigrants. The U.S. foreign-born population had quadrupled from 9.6 million in 1970 to 38.1 million in 2007. In the past decade, more than one million immigrants have entered this country legally each year and about another 500,000 entered illegally. Immigrants from Latin America (including Mexico) account for 54% of all immigrants, compared to 18% in 1970. Asians account for 27% compared to 9% in 1970. Europe and Canada decreased from 68% in 1970 to 15% today. (Terrazas 2009)
According to a 2007 Gallop poll 46% of Americans, believe that immigrants are making the economic situation worse. On the other hand, yearly we gain between one billion and 10 billion of the gross domestic product because of immigration. Likewise, the increase in immigration presents many problems today many believe that immigrants are imperative for the U.S....
...Research Essay – Lewis Carroll
The effects of globalisation on Economic growth and the quality of life in China.
China holds the second largest economy in the world, measured by Purchasing Power Parity (a technique used to determine and compare the relative value of different currencies). From the late 1970’s, the Chinese economy has become more market orientated, rather than its former closed and planned political system. This change has played a major role in the development of their economy and impact of globalisation. At present, it is the world’s fastest growing major economy. Growth rates in the Chinese economy have averaged 10% throughout the past 30 years. By utilising Chinas perfect environment for manufacturing with low minimum income levels compared to other countries, and little to no policies surrounding work place health and safety, in 2010 China became the world's largest exporter. In 2010, 19.8% of the world’s manufacturing output was produced by China, and Industry and Manufacturing account for 46.8% of China’s GDP.
Apart from the thriving Manufacturing industry, China also produces 45% of the world's steel and is the world’s third largest Automotive Manufacturer. Over recent years, China’s Urban wages have received a 13-19% increase to an average of $2472USDp.a.
The Chinese Economy has gained both benefit and been disadvantaged by globalisation trends....
...Inflation impacts on many facets of the economy, these impacts can be both long and short term. It is generally the case that higher levels of inflation carry more severe consequences thus it is often the aim of government to sustain a low level of inflation. Inflation effects economic growth and certainty, wages, unemployment, international competitiveness, exchange and interest rates amongst other things.
High inflation can be a major constraint on economic growth and certainty which ultimately impacts upon international competitiveness. High inflation distorts economic decision making as producers and consumers change their spending and saving patterns to minimise the potential impact of inflation upon themselves. High inflation means consumers are more likely to spend their money rather than save due to the purchasing power of their money reducing over time, on the other hand business investment is discouraged as future profit levels become uncertain. This lack of business investment results in increased export prices and thus reduced international competitiveness and quantity of exports, simultaneously consumers are more likely to switch to import substitutes, worsening the trade deficit. On the contrary however, low inflation leads to increase in business investment and consumer saving leading to the improvement of international competitiveness, making Australian products more attractive for purchase. Ultimately lower inflation rate...