Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Topic 3 - Micro > 3.5.3 Wage Determination in Non/Competitive Markets > Flashcards

3.5.3 Wage Determination in Non/Competitive Markets Flashcards

1
Q

What is equilibrium market wage rate

How is it drawn on a graph

A

Intersection of supply and demand for labour

Employees are hired up to a point where the extra cost of hiring an employee is equal to the extra sales revenue from selling their output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the main causes of differential in wages between occupations

A
  • Compensating wage differentials - rewards for risky jobs, poor work conditions and unsociable hours
  • Reward for opportunity + direct costs of human skill development
  • Different skill levels - market demand for skilled labour grows more quickly than lower-skilled
  • Differences in productive + revenue creation - will more often lead to higher pay
  • trade unions - can allow bargaining power
  • Barriers to entry - education + qualifications
  • Discrimination - although illegal can skill happen
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a Gig Economy

A

People provide a service nearly always through a digital platform

Characterised by prevalence of short-term contracts or freelance

Growth of Gig economy can be traced to impact of last recession

Examples: Uber, Amazon, Hermes, Deliveroo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the benefits to a Gig economy

A

Reduces business fixed costs

Reduced investment + hiring costs

Worked hours can exactly meet demand

Flexibility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the drawbacks to a Gig economy

A

Dount over true flexbility

Low working rights - holidays, pensions, sick leave

Low skilled work

May affect tax revenues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is an Ageing Population

How can this affect the economy

A

Large shift in demographic towards older ages

Around 12.4 million people are pensionable age out of 32.5 million working people

Can impact on: patterns of consumer demand, housing market and labour market, Government spending and demand on public services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How does Robotics and Artificial intelligence impact the economy

A

Productive, costs and profits of firms/ industries at cutting edge

Demand for/supply for labour in specific jobs + real wages e.g automation

Consumer welfare - lower prices leading to greater real income

2013 paper by Oxford academic suggest 47% of jobs are at ‘high risk’ for automation within the next 20 years - especially in finance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How does Labour Migration affect the Economy

A

Net flow of workers entering the UK labour market has slowed, partly due to Brexit

Can impact: shortages of skilled labour, effect of dynamic efficiency with brain drain + lack of entrepreneurship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are trade Unions

What is the main purposes of them

A

use collective bargaining with employers to protect their members

% of employees whom are members of a union in the UK has fall

Role of trade unions include: protecting + improving real living standards/wages, employment rights + conditions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What could possibly be a problem with trade unions

A

Trade unions may bid for employers to pay a premium wage above the competitive market

This may lead to an excess supply in labour and contraction in total employment

Unions will be more successful when demand for labour is relatively inelastic

However: increasing wages could lead to an increase in productivity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Decline in Union membership can reflect

A

growing flexibility of the labour market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are Zero Hour contracts

A

Contracts that don’t guarantee a minimum number of hours of working each week

Tends to be popular in young, part-time, women and in full-time education

They are liked due to their flexibility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the problem with zero-hour contracts

A

Said to increase ‘in work poverty’

People not working enough hours each week to earn enough to avoid remaining in poverty

Overall effect on welfare and social equality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Explain the gender pay gap

A

Is the measured difference between male + female earning, expressed as a % of male earnings

It is suggested it is caused by women taking breaks from the labour market when careers take off due to pregnancy

In lower-Middle income countries - there are lower opportunities to gain education for women

Discrimination occurs despite being illegal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If there was discrimination against women in certain industries, explain diagrammatically how this could lead to lower wages

A

Through Discrimination, it could reduce the supply of female’s in the labour force in some markets, leading to higher wages

This may lead to other industries being more dominated by women, and with high supply of labour, this will bring wages down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the elasticity of demand for labour

A

Measures the responsiveness of labour demand given a change in the wage rate

17
Q

Formula for elasticity of demand for labour

A
18
Q

Reasons for differences in elasticities of demand for labour

SECT

A
  • Substitute of capital for labour - the more wage elastic labour is (cheaper to substitute capital for labour)
  • Elasticity of demand for product - more price inelastic demand for product more inelastic demand for labour is (value of work is higher)
  • Cost of Labour as % of total costs - greater labour costs as % of total costs the more wage elastic demand is
  • Time period - in the long run, all factors of production are variable so labour becomes more elastic
19
Q

Define Elasticity of supply of Labour

A

measure of the responsiveness of labour supplied given a change in wage rate

20
Q

Give for formula to work out the elasticity of supply of labour

A
21
Q

Reason for elasticity of Supply of Labour

NVTT

A
  • Nature of skills required - greater skills set required more inelastic
  • Vocational element of profession - teaching/nursing - people may not leave the profession with changes in wages - inelastic
  • Traning length period - harder for people to enter the profession even with wage increases - inelastic
  • Time - in short-run people may not initially move due to having to give notice e.g. (more elastic in the long run)
22
Q

Intervention to improve labour mobility + incentives

A
  • Subsidisation of training/education/apprenticeships
  • Infrastructure including roads/transport systems
  • Addressing chronic housing shortages + expensive running costs
  • Bigger differences in wages + benefits
  • Lowering tax burdens for low income
  • Rising national minimum wage
  • Subsidisation of childcare
23
Q

What is the minimum wage

Who is it meant to benefit

A

legally-enforced pay floor in the labour market

targets rates of pay for the poorest-paid workers and the chart below tracks the median full-time weekly pay of the lowest-earning occupations in the UK

24
Q

Describe the graph for national minimum wage

A

Employment would contract (to E2) and supply of labour would expand (to E3)

described as a pay floor

25
Q

If demand is inelastic what effect will this has on employment compared to an elastic market

A

If labour demand is inelastic, a higher minimum wage will cause only a limited contraction on the level of labour demand

26
Q

Reasons for a national minimum wage

A
  • Every job should give a fair pay allowing equitable living standards
  • Reduces poverty
  • Encourages firms to train more to increase productivity
  • Incentive to move into work
  • Anti-discrimination - especially in young/female workers
27
Q

Reasons against National minimum wage

A
  • Increases cost of employment and could lead to higher unemployment (even though there has never been evidence to suggest this)
  • Smaller businesses may struggle to make profits/demotivators for start-up
  • Better reasons than NMW to train staff better
  • UK business may be less competitive globally
  • Inflation due to higher business costs
28
Q

What is a Maximum wage

A

Cap on the maximum amount top executives can earn relative to median pay of company’s workers

29
Q

Argument for Maximum wage

A
  • Equity and fairness - growth in executive compared to worker pay, stops growth of super-rich
  • Bonus culture encourages short erm decision making rather than longer-term strategies
  • High growth in executive pay has lead to large inequalities
30
Q

Arguments against maximum wage

A
  • Prevent talents executives more to UK
  • Businesses locating overseas
  • Rewards in otherways
  • Impact differently across different industries due to regional living cost difference
  • true wages aren’t always reported
31
Q

What are public sector pay policies

A

is a single-year policy

It sets out the parameters for pay increases for staff pay remits and senior appointments and applies to public bodies with settlement dates in the year

32
Q

true of false

Average pay is higher in the public sector than in the private sector.

A

true

33
Q

What are the arguments against public sector pay policies

A

that capping pay rises has led to worsening recruitment problems which now threatens the delivery of public services

impact on the NHS in particular.

Topic 3 - Micro (20 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions