Understanding the Role of the Public Sector in the Economy

Public Sector: Formed by all businesses, government, and autonomous agencies directly controlled by politicians. Duties of the state regulate economic activity: Establishing a set of laws and rules that any operator must meet. Produce, purchase, and provide goods and services: The state produces public goods (education, health, justice, etc.); it buys other companies to offer them for free to the public (roads, airports, reservoirs). Other times, the state buys services at lower costs (public transport, university education). Sets the taxes you pay (tax system): The state sets a series of taxes that businesses and households must pay to finance the costs of the state. Redistributes income: The state intervenes to encourage all citizens to have a minimum level of income to live through the income tax, taking away the most from those who earn the most and providing the least (with subsidies, grants, and assistance). Attempts to stabilize the economy (economic policies): The state attempts to control the fluctuations of major economic indicators so that these fluctuations do not result in unemployment and price increases. Economic Policies: Different forms that the government of a country uses to intervene in the economy to achieve major economic goals such as full employment and price stability. Policy on Economic Growth: Fiscal, monetary, and external revenues. Structural Policies: These are measured in the medium and long term, which try to influence the variables that determine the economic structure and the decisions of economic agents. The Employer: Any natural person over 18 years old with full legal capacity to hire a worker. Those under 18 and over 16 have not been deprived of their ability to work through a court order. Unemployment: A situation in which there are workers who would be willing to work at going wage rates but cannot find jobs. To cover the adverse consequences of unemployment, insurance is available only under certain conditions, provided by Social Security. Causes: - Dysfunctions between supply and demand for labor: Lack of labor flexibility, a minimum wage fixation, lack of production, and unequal distribution of employment. Ways of measuring unemployment: The Labor Force Survey and INEM data.