5.3 The Interaction of Labour Markets (incomplete)

Question 1

Explain, and list examples of, Wage Differentials

Answer 1

Wage differentials is where workers are paid different amounts for the same job.
Some examples are:
- Education Level (GCSE, A-Level, Degree)
- Training and Skills (Experience)
- Productivity of Worker
- Gender, Race, Age, Disabilities

Question 2

Explain what Monopsony Power is.

Answer 2

When there is only one buyer (firm) of labour in a market.
The firm has control over the wages.
If the firm wants to hire an additional worker, they must increase the wage to incentivise said worker to join. However this means they must also increase the wage for all of the other workers, since they must all be paid the same.

Question 3

Evaluate how Monopsony Powers affect a labour market.

Answer 3

Employees get much lower wages
Firm makes a lot more profit
Unproductive workers.
Bad working conditions
Much less employees hired
Trade unions help prevent negative effects towards employees

Question 4

Explain what a Trade Union is.

Answer 4

A large group of workers in a given labour market with the sole aim of:
- Securing jobs
- Improving working conditions
- Higher & Secure wages
- Protecting worker’s rights.