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H2 Econs - A Sample Lesson Plan

RIJC 2013 Y6 Prelims Paper 2 Q1) Globalisation and technological advancement have caused rising income inequality in many countries. Minimum wage policy is implemented in many countries to improve the welfare of low skilled workers and narrow the income gap. a) Account for the increasing income gap between skilled and unskilled labour in Singapore. (10m) This is how we approach an essay question:

Write with speed!!! Before starting any essay, take a look at the mark allocation, determine your time limit, then determine the scope (choose the most credit-worthy rigorous frameworks). So 10marks = 15mins = Intro + Conclusion + 2-3 content paragraphs + 1 diagram = 1.5 pages. Here for the content paragraphs, we will explain the changes in DDSS conditions in both markets of skilled and unskilled labour brought about by globalisation. (A question on wages, just like a question on differential prices, makes use of a DDSS & elasticities framework.) We should also make use of at least 1 elasticity concept for rigour. For a DDSS question, it is imperative that you have both DD and SS factors for scope. If you use an elasticity concept, you are almost guaranteed of an L3 mark range. Remember to use concise language, abbreviations etc.so you write faster! Intro:

Widening wage (W) gap leads to increasing income (Y) gap. If you dont make the distinction between wages and income, the examiner might think you have confused the two W gap widens as W of skilled workers are increasing, while W of unskilled workers are falling. often students leave out these very obvious explanations. You must rmb to explain step-by-step! Wage rates are determined by demand (DD) and supply (SS) factors in the labour market. This tells the examiner youll be using a DDSS framework Globalisation has influenced labour market in SG, as accounted for by Theory of Comparative Advantage (CA). and CA framework

We shall first explain why rising DD against an inelastic SS has led to sharp increases in the W rates of skilled labour. We plan this paragraph as follows: CA theory Singapore has CA in KI industries, with egs. KI industries are sunrise industries employ more skilled workers DD for skilled workers increases W rises, holding SS constant (diagram) --> W also increases as firms willing to pay premium to hire and retain talents.

Theory of CA suggests that countries benefit from trade if they specialize in the production of goods they have CA in

Singapore has abundance of capital and skilled labour, hence specializes in knowledge intensive industries eg. pharmaceutical, bio-medical, financial services rmb to highlight some examples, otherwise your marker can give you an L1 for failing to make reference to context Such knowledge-intensive industries require skilled labour to operate high-tech machinery due to technological advancement, and provide value-added services As these sunrise industries expand, they employ more skilled labour hence DD for skilled labour rises from DD0 to DD1. Holding SS constant, a shortage of labour of Q1Q2 arises at prevailing wage rate W0. Hence firms offer higher W while workers ask higher W, exerting upward pressure on W. Thus W0 rises to W1. - Always rmb to

state changes in DD/SS --> recognise surplus/shortage --> explain the price correction mechanism involving sellers and buyers --> exerting upward/downward pressure on price Furthermore, W for skilled labour also rises as firms may be willing to pay a premium to hire and retain talented workers The supply of skilled labour is inelastic (PES<1), due to longer training and education, hence W increases more than proportionately when DD increases, further sharpening the wage disparity.

Next, we explain that DD for unskilled labour is falling while SS is rising due to globalisation, causing W rates to fall.

As firms acquire high-tech capital as a result of technological advancement, DD for unskilled labour falls from DD3 to DD4. Freer labour movement as a result of globalisation has allowed influx of unskilled foreign labour into SG from LDCs with labour abundance eg. China, India, Phillipines, Indonesia.

SS of low-skilled labour increases from SS3 to SS4, resulting in surplus at prevailing W3 of Q3Q4. Employers offer lower wages and workers ask lower wages, hence exerting downward pressure on W, causing it to fall to W4.

Now we end off with a simple conclusion. The conclusion is the last thing your marker reads, and especially if your essay is a long one, you will want to remind your examiner briefly the frameworks you have used, so that they can award you appropriately. The frameworks we used here are: globalisation, theory of CA, DD and SS, and elasticities, so we can write a conclusion as such:

In conclusion, the increasing income gap is due to increase in DD for skilled labour and increase in SS of unskilled labour brought about by globalisation, in line with Singapore's CA in knowledge-intensive industries. The price inelasticity of supply of skilled labour further widens the wage and hence income gap.

Putting them together... Widening wage (W) gap leads to increasing income (Y) gap. W gap widens as W of skilled workers are increasing, while W of unskilled workers are falling. Wage rates are also determined by demand (DD) and supply (SS) factors in the labour market. Globalisation has influenced labour market in SG, as accounted for by Theory of Comparative Advantage (CA). The Theory of CA suggests that countries benefit from trade if they specialize in the production of goods they have CA in. Singapore has abundance of capital and skilled labour, hence specializes in knowledge intensive industries eg. pharmaceutical, bio-medical, financial services. As these sunrise industries expand, they employ more skilled labour hence DD for skilled labour rises from DD0 to DD1. Holding SS constant, a shortage of labour

of Q1Q2 arises at prevailing wage rate W0. Hence firms offer higher W while workers ask higher W, exerting upward pressure on W. Thus W0 rises to W1. Furthermore, W for skilled labour also rises as firms may be willing to pay a premium to hire and retain talented workers. The supply of skilled labour is inelastic (PES<1), due to longer training and education, hence W increases more than proportionately when DD increases, further sharpening the wage disparity. <Diagram as described above> As firms acquire high-tech capital as a result of technological advancement, DD for unskilled labour falls from DD3 to DD4. Freer labour movement as a result of globalisation has allowed influx of unskilled foreign labour into SG from LDCs with labour abundance eg. China, India, Phillipines, Indonesia. SS of low-skilled labour increases from SS3 to SS4, resulting in surplus at prevailing W3 of Q3Q4. Employers offer lower wages and workers ask lower wages, hence exerting downward pressure on W, causing it to fall to W4. <Diagram as described above> In conclusion, the increasing income gap is due to increase in DD for skilled labour and increase in SS of unskilled labour brought about by globalisation, in line with Singapore's CA in knowledge-intensive industries. The price inelasticity of supply of skilled labour further widens the wage and hence income gap. Concise, with scope and depth, and totally doable within 15min right?

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