U.S.A. Is Considered to Be

¶ … U.S.A. is considered to be the only developed country which has labor market based on decentralized system, and has vast experience in this field; the labor market of the country is integrated with possible allocation of resources towards welfare benefits of the unemployed. It is anticipated by the American government that such integration is expected to encourage and increase the rates of labor force participation. The increasing rates of labor force participation is also based on the effect of the real wages of men, and their failure to maintain and achieve minimum level of household income, and the involvement of the married women into labor market. Crime and begging are considered to be alternative of the employment at low wages, in the absence of proper welfare scheme. If the welfare option is not to be exercised due to the economic constraints of the government, it is important for the government to implement high rates of imprisonment to cease the switchover possibility of the labor into malpractices, therefore it is important that the labor market is expanded, and deliver the economic concerns of the employees to avoid any backlash in the form of criminal activities. The labor market has experienced positive growth after the economic recovery since 1990s. The economic recovery has been able to deliver the economic needs of the locals, and the criminal activities reduced. It was reported that the prison population approached two million after the recovery, and therefore it is important for the government to study the feasibility of reliance on prison as the 'employer of last resort' (John, 2004). Therefore such labor market program should be implemented which is able to address the woes of people in economic desperation, and the failure of the government in this area will make to spend more on imprisonment. Therefore when deterrent effects are considered, the high rate of imprisonment emerge as cost-effective scheme for the acceptance of the employment opportunities at minimum wages, and this has created positive impact on the labor reforms, where the labor is available to offer their services, but unfortunately such a scheme has provided the employer with a bargain opportunity, the employer understand that the employee is unlikely to drop the opportunity because the criminal practices are not supportive, therefore the employee will be willing to offer services as per the wages decided by the employer, the government keeping in view such concerns include the threshold of minimum wages, but that has instead of bringing stability to the job has increased the rate of unemployment. The impact of such a scheme is still be to determined when the country experience economic turmoil as it lead to the closure of many business units, and man of the employees at lower wages are expected to lose their jobs. Such scheme has not been adopted in countries like Australia, New Zealand and United Kingdom with reference to the improvement and stability of labor market, and social welfare, this is because these countries do not have social institutions similar to the institutions in United States. It is important to differentiate between the common arguments in the favor of labor market reform, the first argument is based on the 'combination of union monopoly power and government intervention' (John, 2004), the government sponsored scheme including minimum wages, and grant for social welfare is expected to increase the wages of the common employee above the 'market-clearing level' (John, 2004), and this is responsible for high levels of unemployment, the argument supports the concern expressed above with reference to the authority of the employer. It is expected that if the workers are talented and rational, the increase in the wages will be able to deliver their social and welfare woes, and will minimize the risk of unemployment. Therefore the concern against the reforms of labor market is 'standard argument against monopoly' (John, 2004), which is based on the benefits to consumers and eventually employers. The second argument is that employees and employers have restricted option to explore mutual and beneficial understanding to diverge from the level of bargains offered at industry level, and this is a general concern of the 'regulated and centralized labor market' (John, 2004). In such situation the labor market reform is expected to 'generate a Pareto improvement' (John, 2004), and will make the people affiliated with the operations of the centralized system incur the losses. The employees likely to get affected include union officials, and members of industrial courts. Therefore it is the flawed system of income distribution, and the existence of the monopoly power. It is believed that deregulation of the product market create major impact on the outcomes of labor market. It has been reported in some of the countries labor market has undergone reforms where product market deregulation has taken place, and this is true for those countries where product market deregulation has preceded labor market deregulation. Therefore there is no coherence between the labor market outcomes and labor market reforms. It is believed that 'varying degrees of product market deregulation across countries may have had as great an impact as the differences in labor market reforms' (John, 2004).

Considering the proposal of Calmfors-Driffill hump, it is believed that it is not possible to point out the position of the country on the hump, this can be only determine after carrying comprehensive insight of the effect of changes with respect to the relative position of the country on the hump. The labor market outcomes are generated either through 'greater centralization or greater decentralization' (John, 2004). Considering the example of Australia, it has been observed that labor market outcome has not been convincing, where as the country has experienced centralization and decentralization. Labor market institutions have made significant contribution in some of the places, such institutions have successfully achieved complex and economic outcomes, and therefore 'it may be too narrow to assess the efficacy of institutions solely in terms of their impact on labor market outcomes' (John, 2004).

Labor Market Parameters

The distinction between the employed and non-employed individuals is based on their working hours, generally the employees are classified into five different categories i.e. employees who work for more than 15 hours per week, employees who work less than 15 hours per week, discouraged employees, unemployed, and individuals who are economically inactive. The further distinction within the employed people is based on their full-time and part-time assignment; full-time work is 35 hours per week. There is distinction between the employees and self-employed in the labor reforms, the distinction is based upon the type of employment. According to the labor reforms, main activity status is referred to classify the employees into full-year worker, part-year worker and non-worker. A person who worked for the entire 12 months is classified as full-year worker; a person with minimum one month of employment period in a particular year is classified as part-year worker. Within the labor market, the women employees have lower arrival rate from other locations to avail distant job opportunity, the female employee is expected to secure low variance in the wages irrespective of the location, as compare to the men who are offered better opportunity for flipping their locations, therefore in the current labor market, 'women have a lower propensity to migrate compared to men' (Ahu, 2007). The WTO has been created immense opportunity for the world-wide labors, it has disturbed the monopoly and has developed an environment of competition, and therefore we observe that every government has introduced immense improvement in their labor market, because its the labor which supplies and incorporate quality into the product.

Canadian Icon of Labor Market Reforms