1.2.5 the labour market

Question 1

Wage rate

Answer 1

Amount of money paid to workers for their services over a period of time

Question 2

Derived demand

Answer 2

Demand for labour is derived from the demand for goods and services supplied by firms and the public sector organisations (demand that arises because there is demand for another good)

Question 3

Demand for labour

Answer 3

Represents the no. of workers that firms are willing and able to hire at diff. wage rates

Question 4

Factors that affect the demand for labour

Answer 4

• Demand for products (derived demand)
• Availability/efficiency/cost of substitutes (machinery)
• Technological advances
• Productivity of labour/workforce
• Other costs such as insurance, meals, leaves, wages
• Size of industry

Question 5

Supply of labour

Answer 5

No. of hours that people are willing and able to work across diff. wage rates

Question 6

Factors affecting the supply of labour

Answer 6

• Population size
• Migration
• Age distribution
• Retirement age
• School-leaving age
• Female/male participation
• Skills and qualifications
• Labour mobility

Question 7

Labour mobility

Answer 7

The ability to move locations/move to different types of employment

Question 8

Wage differentials

Answer 8

Differences in wages between occupations, industries, locations and groups of workers

Question 9

Importance of quantity and quality of labour to businesses

Answer 9

• Businesses consider skill boundaries (cannot afford consequences of unskilled work)
• Businesses choose locations (have to make sure there are enough workers near site chosen)

Question 10

Impact of education and training on human capital and quality of labour

Answer 10

• Education and training can improve human capital and labour
• Businesses will want to recruit those with good skills
• Being well-educated and trained can lead to being more productive

Question 11

Human capital

Answer 11

The levels of education and skill possessed by the labour force

Question 12

Trade unions

Answer 12

Organisations representing people working in a particular industry/profession that protects their rights (exists to protect the interest of workers)

Question 13

Main aims of trade unions

Answer 13

• Negotiate pay and working conditions with employers
• Provide legal protection (representation in court)
• Put pressure on the govt. to pass legislations that improve the rights of workers
• Provide financial benefits (strike pay)

Question 14

Effect of trade unions on wages and employment

Answer 14

• Forces wages up
• Affect wage and employment levels
• Higher wages may result in job losses