Simple Question (1 Viewer)

[saki]

If the governement implements Labour market polciy, is this an example of microeconomic reform , true?


cause all the textbook says are

macro = monetary, fiscal
micro= Competition,refroms in product/factor markets

but makes no mention where labour market policy fits in..

 

[timmii]

yes - its microeconomic...it *structurally* changes the way the economy operates...labour is a factor ( a "resource").

 

[saki]

alrite cool.. thx

but, i was just browsing my notes, til i came across this.

The reasons for using a price/income policy is because it is an instrument of macropolicy to control wage demands/expectations of trade unions to acheive wage moderation ir restraint and low inflation.


now im confused...

 

[Newbie]

your notes are right i think

but australia doesnt use it because of some constitutional issue

 

[timmii]

ok this wasnt a major focus of the course.

Prices/wages policy is a form of macroeconomic policy. This refers to however to policy intiatives such as The Accord - by which wages were centrally determined and indexed to inflation. This was in the time of Hawke...

Now however, labour market reform is not about actually *fixing* prices and incomes, it is about improving the structure of the labour market to improve efficiency - it is thus *microeconomic*.