Economic Essay Example | Topics and Well Written Essays - 500 words - 1

Economic - Essay Example How does unemployment affect government revenues, furthermore how are these revenues significant in the government benefit payments (such as pensions)?† Body In some circumstances, a country’s labour market maybe impacted upon by externalities. By the term externalities it refers to the factors not emanating from inside the economy. The UK labour market in the 1970s, according to Erickson and others, was inflexible, caused by economy’s lack of being competitive in the world market and it led to escalating levels of inflation. This caused an uphill task for the incoming government of year 1979, which was a conservative government. The new government aimed at changing this by way of deregulation. This resultant situation after the employers faced lesser regulation was aimed at their offering new employment opportunities. Despite this bold move by the government, unemployment levels still remained high. In the 1980s through 1990s decades, the labour market of the UK ensured that the employers’ needs were fully satiated since skilled labour would be applied cheaply. However, the levels of unemployment fixedly remained at approximately 2 million due to the fact that most of the workers could not still find jobs.