3.5.2 supply of labour Flashcards
What are some of the factors impacting the supply of labour?
- wages
- population and distribution of age
- non monetary benefits
- education/training
- trade unions and barriers to entry
- legislation
- conditions of other jobs
- migration changes
- income tax
- social trends
How do wages impact the supply of labour?
Increased wages will lead to an increase in the hours worked by an individual at first, but beyond a certain point, any further increases lead to a decrease in hours worked. However for a firm, increased wages may not increase number of hours worked by existing labour but it may increase quantity of labour - as people join from other industries or unemployment.
How does population and distribution of age influence supply of labour?
Higher population increase labour supply. There needs to be a high amount of people at working age to ensure high amounts of labour.
How does migration influence supply of labour?
Migration increase labour supply as many migrants are of working age and come to the UK to work.
How do non-monetary benefits influence the supply of labour?
High job satisfaction will increase labour supply. Jobs may be more attractive if they are close by/require little commuting. Other jobs may offer perks such as free private healthcare, increasing supply of labour. Other factors such as holiday, hours of work, flexibility and promotion opportunities are significant.
How does education and training influence labour supply?
More educated workers increase labour supply. Some industries require qualifications and high levels of education.
How do trade unions and barriers to entry influence labour supply?
Trade unions may restrict supply of labour may introducing barriers to entry eg. needing a degree to have a job in teaching.
How do conditions of other jobs influence supply of labour?
If many jobs in a local area are unpleasant and offer low wages, supply for alternatives will be much higher
How does legislation influence the supply of labour?
Government rules can affect labour supply eg. school leaving age and retirement age
How does income tax influence the supply of labour?
Higher incomes tax levels may act as a disincentive for people to find jobs, as their disposable income levels are reduced.
How does market failure occur in labour markets?
Labour may suffer from geographical or occupational mobility (the inability of workers to move between jobs)
Why may labour suffer from occupational immobility?
Workers may find it difficult to move from one job to another because of a lack of transferable skills. It is especially difficult in the short run when workers need to get new training but in the long run it may be possible for a high cost.
Why may labour suffer from geographical immobility?
They find it difficult to move from one place to another due to cost, family etc. It may be expensive to attend interviews that are far away. Housing can also be an issue, as people may struggle to afford a house in their new area of work. Those on lower incomes tend to be more geographically immobile.
How can labour immobility lead to excess demand/supply?
Immobility can lead to excess supply of labour in one area/occupation and excess demand in another.
What are some factors that influence the elasticity of supply of labour?
The responsiveness of supply to a change in wage rates.
- depends on levels of qualifications and training as if there is a high level of qualifications necessary for the job, people are unable to take up jobs, making supply of labour more inelastic
- can depend on the availability of suitable labour in other industries eg. if a company can obtain workers from other industries, supply is more elastic
- in the long run, supply of labour is more elastic as people can train/gain qualifications
- if a job is vocational, it will likely be inelastic as people won’t leave even if wages fall
