3.5.2 - supply of labour Flashcards
what is labour supply
The supply of labour curve shows the ability and willingness of people to make themselves available to work at different wage rates.
what are the factors that affect the supply for labour
Population and distribution of age: A high population will mean there is a large supply of labour. The distribution of age is important as there needs to be many people of high working age to ensure there is lots of labour. Migration plays a role in determining the workforce, since many migrants are of working age and come to the UK to work.
● Non-monetary benefits: Supply of labour will increase if there is high job satisfaction, for example in vocational jobs. Some jobs are attractive because they are close by or in an area with good social life, such as London, require little commuting or are near friends and family. Similarly, some jobs offer perks such as free private healthcare etc. which will increase supply. Factors such as holiday, hours of work, flexibility and opportunities for promotion also play a significant part.
● Education/training/qualification: More educated workers means there is a higher supply of workers. This is particularly important for some industries which require qualifications. Occupations which require high levels of education may suffer from lower supply of labour compared to low skilled jobs.
● Trade unions and barriers to entry: Trade unions may be able to restrict the supply of labour by introducing barriers to entry, for example you have to have a degree for teaching.
● Wages and conditions of other jobs: If many jobs in a local area are considered to be unpleasant and offer low wages, then supply for alternatives will be higher.
● Legislation: The government rules can affect supply of labour, for example school leaving age and the retirement age.
what is market failure in the labour market
The labour market should operate in the same way as any other. An increase in wages should attract labour to the industry and a fall in wages should mean labour leaves industry. However, labour is not a perfectly free market.
what is occupational immobility as labour market failure
They can suffer from occupational immobility where workers find it difficult to move from one job to another because of a lack of transferable skills. It is particularly difficult in the short term when workers need to get new training but in the long run it may only be possible at a high cost.
what is geographical immobility as labour market failure
geographical immobility is workers find it difficult to move from one place to another due to the cost of movement, family etc. There may be no jobs available in Glasgow, but jobs in London. Unfortunately, someone from Glasgow will struggle to get a job in London as they may not know about the vacancies, it would be expensive to attend interviews and they would have to leave their family behind. Housing is also a big issue because people may not be able to afford to buy a house in their new area. They may also struggle if they need to find social housing and it is difficult for young people, since they often do not have the money to move out of their parents’ home. In general, those on lower incomes are more geographically immobile.
