3.5.2 Supply Of Labour

Question 1

What is occupational mobility?

Answer 1

It is the ability of the worker to switch jobs

Question 2

What is geographic mobility?

Answer 2

The ability + willingness to move areas for the same job

Question 3

What is the issue with occupational/geographical mobility

Answer 3

• key issue is that labour can’t simply move to any job since a lot of jobs require skills, experience, expertise
• in some cases they can’t easily move areas for a job in the same field - infrastructure
• this means perfectly competitive labour markets are unrealistic
• these concepts are e.gs of market failure with labour markets - govt. may intervene with policies to correct

Question 4

What does the supply of labour to a given industry depend on?

Answer 4

• monetary reasons = wages, bonuses, commission (sales), benefits e.g. company car
• non-monetary reasons = job satisfaction, location, family commitments

Question 5

Explain non-monetary reasons that impact the supply of labour?

Answer 5

• job satisfaction = workers may accept lower pay in order to maximise satisfaction
• location = close to relatives, friends, social life
• family commitments
• commuting - time spent travelling (cost of journey)
• suits lifestyle = fits in with other commitments = part time/full time

Question 6

Factors influencing the supply of labour to a particular job

Answer 6

• skills, qualification, expertise = depends on how many people are able to perform the task
• more people can do a low skilled job as opposed to a highly skilled job
• occupational mobility = if more people are trained with the necessary qualification
• net migration of labour = people migrating for job opportunities to relieve shortages of skilled labour in the NHS or to meet seasonal demand for workers in agriculture + construction

Question 7

When will the market supply of labour shift?

Answer 7

• When there is a change in one or more of the conditions of supply in a given labour market
• rightward shift = more people are willing + able to work at a given wage rate
• leftward shift = fewer people are willing/able to offer themselves for work in a given occupation at the prevailing wage rate

Question 8

Possible causes of a rightward shift in labour supply?

Answer 8

• net inward migration of suitable qualified/ experienced workers
• fall in relative pay/ earnings in substitute occupations
• lower entry barriers to this particular job e.g. minimum professional qualifications = shorter training periods, experience, skills lower, cost of child care
• demographic factors causing a rise in active labour supply e.g. increased retirement age
• working conditions are better e.g, working from home

Question 9

Possible causes to a leftward shift?

Answer 9

• opposite of factors for rightward shift
• brain drain effects = economy loses skilled workers overseas (emigration) might be due to higher wages/lower tax
• decline in non-monetary rewards associated with the job e.g. job dissatisfaction
• fall in relative pay in occupation in comparison to other jobs
• work considered less appealing - health risks, anti social, too stressful

Question 10

How do barriers to entry influence supply of labour?

Answer 10

• artificial limits to an industry’s labour supply e.g. minimum qualifications needed can restrict supply + increase wages
• some professions are very hard to do or take a long time to qualify e.g. doctors
• means the PES for doctors is more inelastic, as well as CEOs, lawyers + bankers