4.2.5.2 Supply Side Policies: types

market based, interventionist

two types of supply-side policies

privatisation, deregulation, income tax cuts, flexible labour markets, free-trade agreements, reduce welfare benefits

types of free-market focused approaches

privatisation

free-market focused approach: sell state owned assets to private sector - improve incentives

deregulation

free-market focused approach:

• Allows new firms to enter market

  • open monopolies to competition

• Makes it easier to build new factories and housing

income tax cuts

free-market focused approach: greater incentive to work longer hours

flexible labour markets

free-market focused approach: this reduces power of trade unions, min wages and regulations

free-trade agreements

free-market focused approach: reduce tariff barriers and other obstacles to trade

reduce welfare benefits

free-market focused approach: increase incentive to get a job

public sector investment, education, vocational training, housing supply, health spending

types of interventionist approaches

public sector investment

interventionist approach: improves investments and reduces costs

education

interventionist approach: increase funding to schools and universities - improve labour productivity

vocational training

interventionist approach: gov. schemes to provide new skills to those who lose jobs

housing supply

interventionist approach: increase supply of council housing improves geographical mobility

health spending

interventionist approach: public spending on health can reduce hours lost to ill-health