Deregulation macro

    Cards (5)

    • 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
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