After seeing about a year of politicians making the facile comparison between national debt and household debt to explain why we can't go on borrowing, I'm not surprised by this. (Basic economics hint: they're not the same, regardless of what William Cobbett might say.)
Anyway, yes, in terms of simple economics NI will increase costs to employers/reduce wages to employees/decrease employment based on the demand elasticity of labour supply and demand. The supply of labour is fairly inelastic, it seems, which means that the reduction in jobs is fairly small, and employees take a hit on their wages instead.
I could probably manage to graph it; I think I just about remember that much from my Principle of Economics.
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momijizukamori
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Date: 2010-Apr-14, Wednesday 23:11 (UTC)Anyway, yes, in terms of simple economics NI will increase costs to employers/reduce wages to employees/decrease employment based on the demand elasticity of labour supply and demand. The supply of labour is fairly inelastic, it seems, which means that the reduction in jobs is fairly small, and employees take a hit on their wages instead.
I could probably manage to graph it; I think I just about remember that much from my Principle of Economics.