Market Equilibrium & Government Intervention
CORE 001 INTRODUCTORY ECONOMICS GROUP 2 PROJECT REPORT
Prepared for: Prof Tan Swee Liang
LYDIA LOW NGUYEN NHAT QUANG ZHANG HONG BRIEN KEITH SEAH
Case 1: Shortage of Civil Engineers in India This article highlights how India, the world’s new “high-tech” titan, is facing the problem of poor infrastructure due to a lack of civil engineers. Our group examined several factors that could have led to the shortage as well as analyzed the effects of government intervention in India’s labor market for civil engineers. Market Forces of Demand and Supply Firstly, the low entry salary of civil engineers makes the career unappealing, even to civil engineering graduates. The resulting shortage can be seen as the difference between quantity supplied, Q1, and quantity demanded, Q2 as shown in Figure 1 where entry wage is depicted as WA. DD2
Secondly, the comparatively higher salary offered by IT industries, management consulting and financial services causes civil Figure 1 engineering graduates to switch to these sectors. This further increases the shortage, as the supply curve shifts from SS1 to SS2, causing quantity supplied decrease from Q1 to Q3. Finally, India’s government spending on infrastructure development causes increased demand for civil engineers. This causes the demand curve to shift right from DD1 to DD2 causing quantity demanded to increase from ...