3.5.2 Supply Of Labour Flashcards
What are the NINE edexcel Factors Influencing The Supply Of Labour
- Training period
- Wages in other occupations
- Changes in migration policy
- Income tax levels
- Working conditions
- Trade union power
- Level of welfare benefits
- Social trends
How do Training periods influence the supply of labour?
Long training periods act as a barrier to entry and exclude many households from offering labour in certain markets.
For instance, in the labour market for doctors, the length of time it takes to study to become a doctor limits the supply of doctors
How do Wages in other occupations influence the supply of labour?
Comparative wage rates in substitute labour markets strongly influence the supply of labour
e.g. it is getting harder to recruit law teachers as the private sector offers higher wages for their skills
How do Working conditions influence the supply of labour?
The working conditions and non-pay benefits can act as strong incentive in certain industries e.g. tech companies are well known for their laid-back work environment and wide range of benefits e.g. on-site childcare and restaurants
How do Income tax levels influence the supply of labour?
At a certain level, income taxes become a disincentive to households offering their labour. The assumption is that as income tax increases, labour supply decreases - and vice versa
How do Changes in migration policy influence the supply of labour?
Policies that increase the net migration rate increase the supply of labour to certain industries (NHS is 20% immigrants)
e.g. Brexit revealed the extent of foreign labour in the hotel industry in the UK and the withdrawal created a shortage of workers
How do the Level of welfare benefits influence the supply of labour?
The higher the level of welfare benefits, the lower the incentive for low-skilled labour to offer their labour - and vice versa
How does Trade union power influence the supply of labour?
Trade unions can increase the supply of labour to certain industries as workers consider the benefits of belonging to the union e.g higher wages and a safer working environment
How do Social trends influence the supply of labour?
Social trends include any major changes within society and can influence the supply of labour to certain industries.
Work from home during Covid resulted in significant changes to the labour market once economies opened up again e.g many restaurant workers did not feel safe returning to the jobs they previously had
What are the two market failures in the labour market?
- Geographical immobility of labour
- Occupational mobility of labour
Market failure happens when resources (in this case, labour) are not allocated efficiently — meaning, workers aren’t where they’re most valued or needed, and as a result, the economy is worse off than it could be.
What is Occupational mobility of labour?
This refers to the ability of a worker to change occupations when they lose a job.
If their skill base is transferable between different occupations, then their occupational mobility is high.
In reality, many workers are not able to easily transfer between occupations and this is a particular issue when an economy is faced with structural unemployment.
What is geographical immobility of labour?
This occurs when workers find it difficult to move from one geographical area to another in order to secure employment.
Barriers to mobility may include family ties, lack of information about possible jobs in different parts of the country, and the challenges in securing/affording accommodation in an unknown location and weak transport infrastructure
In a perfectly efficient labour market, you would expect:
- Workers to move easily to where jobs are available (geographically).
- Workers to switch easily between jobs based on what the economy needs (occupationally).
