Question

The Bosman ruling is a 1995 European Court of Justice decision concerning freedom of movement for workers. The ruling banned restrictions on foreign European Union players within national leagues and allowed players in the EU to move to another club.

1.The English Premier League (UK) received many foreign players after they were allowed to move without restrictions. Assuming a perfectly competitive market, what effect will this decision have on the labor market for soccer players in the UK? Make sure to address the following: what happens to the supply of players, the number of players in the league, and the wage of those workers.

2. In response the Bosman Ruling, many players from the Netherlands left the country to play in more competitive leagues in other countries. Again assuming a perfectly competitive market, what is likely to happen to the supply of, number of, and wage paid to soccer players in the Netherlands after the ruling?

Answer 1

Ans 1=A reduction in the level of supply/a rise in the level of demand will increase wages; an augmentation in supply / a reduction in demand will lessen them.

The demand curve depends upon the MP of labor & the price level of the product labor manufactures. If the demand curve shifts rightward, either because productivity / the price level of product has risen, wage rate will be pushed up.

In the long-term the supply of labor is just a function of the populace size,but in the short-term it depends upon determinants like worker preferences, the competencies & the training a job demands, & wage rates available in alternative occupations.

An increase in the supply of players will normally cause a decrease in the wage rate. The fact that an augmentation in supply tends to weaken wages explains why labor unions / professional associations have normally try to restrict the number of personnel in their specific industry.

Ans 2=If a particular part of a country is an especially attractive place to live in & if there is perfect labor mobility, then more & more laborers will move to that place, which in turn will raise the supply of labor & lower wages. In case the appeal of that region vis-a-vis other regions doesn’t change, the wage level will be set at such a rate that laborers will be indifferent between living in region that are more attractive but with a lesser wage rate & residing in regions that are more attractive with a greater wage. Like this, a sustained state of equilibrium with various level of wages across different regions can occur.

A fall in the level of supply of players will normally cause an augmentation in the wage rate. The reality that a reduction in supply tends to bolster wage level explains why labor unions/ professional associations have usually try to restrict the number of laborers in their particular sector.