3.5.2: Supply of Labour Flashcards
What does the supply of labour curve show?
- The supply of labpour curve shows the ability and willingness of people to make themselves available to work at different wage rates.
What are the factors which influence supply of labour?
- Wage Rate
- Population and Distribution of Age
- Non-monetary benefits
- Education/ training/ qualification
- Trade unions and barriers to entry
- Wages and conditions of other jobs
- Legislation
- Benefits and Taxes
How do wages affect thne supply of labour?
- Workers will probably be drawn to higher paying jobs over others. The higher the wages, the greater the supply to that job.
How does population and distribution of age?
- A high population means that there is a large supply of labour
- Distribution of age is important as if there are more people of working age then there will be a higher labour of supply.
- Migration impacts supply of labour, as if there are more migrants of working age, the supply of labour increases
How do non-monetary benefits affect the supply of labour?
- If there is high job satisfaction (eg in vocational jobs), the supply of labour will increase
- Social life can also increase the supply of labour (eg LDN lifestyle)
- Fringe Benefits such as free private healthcare, company cars will also increase supply of labour
How does education/training/ qualifications influence the supply of labour?
- More educated workers= higher supply of labour (workers)
- Occupations which require high levels of education may suffer from lower supply of labour compared to low skilled jobs
How do trade unions and barriers to entry affect the supply of labour?
- Trade unions may restrict the supply of labour by introducing barriers to entry, eg you must have a degree for teaching
How do wages and conditions of other jobs influence the supply of labour?
- Supply of labour will be higher if, jobs in a local area are considered bad and have low wages
What are the types of market failure that can occur in the labour market?
- Immobility (Occupational and Geographical)
- Excess supply/ demand
How does labour suffer from occupational Immobility?
- Workers can find it difficult to move from one job to another due to the lack of transferrable skills.
How does labour suffer from geographical Immobility?
- Workers find it difficult to move from one place to another due to high travel costs, lack of efficient transport infrastructure, family etc
- Housing costs are another cause. In general, those on lower incomes are more geographically immobile.
How does Immobility cause excess supply/ demand of labour?
- Eg geo Immobility can cause excess supply of labour in an area and excess demand in another
- EV even if wages are higher where there is excess demand, people will be unable to leave where there is excess supply to get a job in that area due to Immobility.
What is the elasticity supply of labour?
- The responsiveness of supply to a change in wage rates
What does the elasticity supply of labour depend on?
- The level of qualifications and training
- Availability of suitable labour in other industries
- Time
How does the level of qualifications and training affect the elasticity supply of labour?
- A high level of qualifications for a job will cause supply of labour to be inelastic as people will not easily be able to take up the job.
How does the availability of suitable labour in other industries affect the elasticity of supply of labour?
- Supply of labour can be more elastic if other companies can poach workers
How does time affect the elasticity of supply of labour?
- In the long run, supply of labour will be more elastic as more people will have time to train. If the job is vocational, it will be inelastic since if wages decrease, people won’t leave the job.
