Deregulation macro

• Deregulation is a free market approach which economists believe will increase the quantity of labour and enterprise through:

  • more firms being incentivised to set up and hire workers
  • lower barriers to entry e.g. environmental impact regulation as a cost
• An example of a deregulated labour market is the gig economy; where workers are essentially self-employed and are commission paid. E.g. Deliveroo, Uber
• Deregulated labour markets can increase productive efficiency by allowing firms more flexibility in hiring and firing and only employing workers when needed.

  This can lead to increased inequality as:

  • owners of these firms enjoying higher profitability
  • workers will have a lower and less secure income
• Deregulation can lead to a macro impact:

  Workers with precarious (unstable) incomes will have a lower MPC and be less likely to spend. E.g. less likely to take out mortgages, reducing AD
• Negative externalities caused by deregulation include

  • creating costs for third parties
  • e.g. health problems associated with pollution
  • this leads to higher demand for healthcare
  • tax payers have to take the toll for this as taxpayers fund the NHS