3.5.2: Supply For Labour

Question 1

What is supply for labour?

Answer 1

The number of hours people are willing & able to supply at a given wage rate at a given period of time.

Question 2

What determines supply for labour?

Answer 2

Real wage rate.

Question 3

What factors affect supply for labour?

Answer 3

-Wage rate: a rise in wages will lead to a rise in hours worked at first, but beyond a certain point, it will lead to a fall in hours worked.
-Population: a high population will mean there is a large supply of labour (migration plays a role).
-Labour-Leisure Trade Off: part-time work and early retirement is attractive to some people.
-Qualifications: high training reduces the supply for workers.

Question 4

What are the two forms of market failure for supply for labour:

Answer 4

-Geographical mobility.
-Occupational immobility.

Question 5

What is geographical immobility?

Answer 5

The barriers that prevent the factors of production moving between areas.
Example: labour might find it hard to find work due to family & social ties.

Question 6

What is occupational immobility?

Answer 6

The barriers that prevent the factors of production changing their use.
Example: labour might find it difficult to change the occupation.