4.1.6 Flashcards
define MRPL (Marginal Revenue Productivity of Labour)
extra revenue generated when an additional worker is employed
equation of MRPL?
MPPL(Marginal Physical Product of Labour) (+ Price) or (Marginal Revenue) = MRPL
why does MRPL curve shift/increase?
increase in productivity (e.g. tech, training, specialisation, division of labour)
why could the MRPL shift to the left?
Technology could decrease demand for workers and their labour
what affects the elasticity of demand for labour
the elasticity of demand for products
how easy it is to substitute another factor of production for labour
the proportion of labour costs to total costs of production
define monopsony
market with only 1 buyer
buyer has buying + wage setting power over potential employees
examples of monopsony employers?
NHS Armed Forces Retailers Supermarkets Local councils Big Out-Sourcing Businesses e.g. G4S, capita
define collective bargaining
negotiation between employees and employers to help make agreements on things like salaries/conditions/benefits
define trade union
association of workers whose primary objective is to promote its members and their rights/interests
what’s closed shop?
you can only work for a certain employer if you join a certain trade union
what’s a single union agreement?
agreement between an employer and a union so that the union will represent all the workers at a particular workplace
what’s the benefits trap?
when some people don’t work and find it better to live off benefits
advantages of NMW
greater welfare for workers
reduces income inequality
makes labour more productive
gives incentive to work
disadvantages of NMW
increasing NMW risks unemployment increase
If NMW is above W*/equilibrium
define NMW
legally protected pay floor in labour markets
employers can’t pay below it