Supply side policies are specific actions taken by the government to try and boost the productive capacity of the economy, increasing long run aggregate supply.
Examples of supply side policies include: Education and training - boosting the skills of the labour force, improving human capital. Changes to tax and benefits system - reducing marginal rates of taxation and encouraging people on benefits into work. Industrial policies - making a productive environment for private sector investment by removing regulations and using subsidies. Migration policies to increase the size of the labour force
Supply side policies benefit from avoiding policy conflict. They can be used to promote long run economic growth, and therefore increase employment, while also keeping inflation low and stable. However, there will be a time lag of a number of years, or even decades, before their benefits are felt. They are also costly to implement, and therefore opportunity cost should be considered
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