Question

• There has been a growth in the “gig” economy.
  • How will the structure of the labor market, including the gig economy effect consumer confidence? How will it effect the growth of wealth of households? How will it effect investment spending?

Answer 1

1) The gig economy is characterized with a labour market wherein there is the prevalence of freelance work or short-term contracts rather than the permanent jobs. The gig market is not subject to traditional protection and accountability laws for the workers, and operating widely outside the social safety net. Although the temporary arrangements provides tremendous benefits such as freedom and flexibility, however the labor in the rapidly-evolving gig economy experiences an increased financial hardship risk from being responsible totally for their own income and benefits.
Thus under gig economy the performance of the labor market is a critical factor in evaluating the consumer confidence. There will be an improvement in the labor confidence which are based in the high employment labor market and gig economy founded on efficiency. It will yield high income and thus cause an increased in purchases and consumer confidence in an economy. On contrast, the consumer confidence will be reduced in the labor market is with low employment and limited free market system because it will reduce the income level.

2) The wealth of households reduces under the labor market is not productive and increases when the labor market is efficient and responsive. The unproductive labor market will result to low employment rates thus reduce the household wealth and causes low investment spending. An efficient labor market is much flexible and increases the employment opportunities and investment spending which in turn increases more money to circulate in the economy