17 Supply Side Policies- Econ DP2

Infrastructure investment

Policies to fund large-scale public projects--ports, highway systems, bridges, communications networks, or power and water systems, with the purpose of increasing efficiency and reducing costs

Investment in education (human capital)

Policies to fund and increase access to public education and job training to improve labor quality and productivity; specifically targets reducing the natural rate of unemployment.

Investment in public health (human capital)

8. Policies to fund and increase the amount of and access to quality health care, which will boost labor productivity.

Investment in new technologies

12. Policies to fund research and development (R&D), government tax incentives, and/or awarding patents towards new or improved capital goods

O. Support for small and medium-sized firms

Tax exemptions, grants, low-interest loans, and business guidance in order to promote more capital formation and employment opportunities.

Deregulation

Elimination or reduction of government policies pertaining private sector activities. Also may involve removal of rules that are typically in place to protect against negative externalities of production (e.g. product quality and safety, worker safety, pollution control)

Anti-monopoly regulation

Policies used to restrict market power, break up large firms engaging in monopolistic practices, and prevent mergers that would result in too much market power--the ability to restrict output and increase prices

Contract out to private sector

Government agreement with privately owned firms to provide goods and services, such as information technology, human resource management, or accounting services; firms will compete for government contracts

Privatization

Policies to transfer ownership of a firm from the public to the private sector in order to increase efficiency and lower operating costs.

Trade liberalization

Reduction of international trade barriers to promote more competition and improve resource allocation.

Altering minimum wage legislation

Changing price floor policies in the labor market so that wages fall, business profits increase, and employment may increase.

Reduction of job security

Any policy making it easier and less costly for firms to fire workers.

Reduction of unemployment benefits

Decreasing the duration or amount of unemployment benefits to incentivize employment; may potentially reduce the natural rate of unemployment.

Union power reduction

Restricting the power of labor to organize and bargain with employers, with the goal of reducing wage-setting abilities, and making wages more responsive to supply and demand.

Business and capital gains tax reduction

Lowering taxes so that more money can be saved for future investment into greater production of capital goods, which may increase the economy's potential output.

Personal income tax reduction

Based on the ideas of Arthur Laffer, reducing taxes may boost productivity or hours worked enough to increase incomes and increase tax revenue.

Infant Industry Protection

Use of tariffs, subsidies, or quotas to help a growing, potentially competitive industry, and to shield from foreign competition until economies of scale can be achieved.