6.2 Influences On The Supply Of Labour To Different Labour Markets Flashcards
What does the demand curve for labour show?
How much labour all the firms demand at different wages
What does the labour supply curve show?
Shows how much labour all the workers plan to supply at different wage rates
What are the two factors that influence the amount of labour workers are willing to supply?
- Money wage rate
- Utility derived from other aspects of working(non-monetary benefits) eg job satisfaction
How is a person who enjoys their job influenced?
Net advantage of work> welfare yielded by the wage
(Willing to work for a lower wage than if there was no job satisfaction)
What type of work creates job satisfaction?
Commonly heavy manual labour and factory work
What is the substitute of work for workers?
Leisure time
What are work and leisure both affected by?
Law of diminishing marginal utility
What happens as more labour is supplied at an hourly rate?
Less and less satisfaction for the worker
How much labour must a worker supply to maximise personal welfare
Utility of welfare from the last unit of money earned=utility of welfare from the last unit of leisure time sacrificed
What does utility of welfare from the last unit of money earned=utility of welfare from the last unit of leisure time sacrificed essentially mean?
Marginal private benefit received from supplying labour=marginal private cost incurred from giving up leisure time
(No incentive for worker to supply labour at current rate)
What does a higher wage do to a worker?
Gives more incentive give to work more hours
What should a worker do if higher wages are offered
At the margin, should work more to maximise personal welfare
Do non-monetary advantages usually change quickly or slowly?
Slowly
What does changes in mon-monetary factors do?
Shift the individual and market labour support curve
What are the non monetary factors?(5)
-job security
-promotion prospects
-good working conditions
-holidays entitlement
-other psychological benefits of work
If people value leisure time at a given wage rate what happens to the labour supply curve?
Labour supply curve shifts to the left
If people value goods and services time at a given wage rate what happens to the labour supply curve?
Labour supply cover shifts to the right
What 3 factors can shift the labour supply curve?
Changes in income
Changes in population
Changes in expectations
How does changes in income shift the labour supply curve?
-rise in income leads to increased demand of leisure (leisure is a normal good), increase in leaisre shifts supply curve to the LEFT
-if leisure time is an inferior good higher income reduces leisure time and shifts labour supply curve to the RIGHT
How does changes in population shift the labour supply curve?
-rise in population - SHIFT TO THE RIGHT
-fall in population- SHIFT TO THE RIGHT
How does changes in expectations shift the labour supply curve?
-people become more optimistic about time span-SHIFT TO RIGHT
-increase number of people in higher education-SHIFT TO THE LEFT
What is the elasticity supply of labour?
How the supply of labour proportionally changes with following a change in wage rate
What is the calculation for the Elasticity supply of labour?
Change in quantity of labour supplied/change in wage rate
What 4 factors affect the elasticity supply of labour?
-level or skill (unskilled elastic-short time period to train)(skilled inelastic-long period to train)
-factors which reduce the occupations and geographical mobility of labour-tend to reduce elasticity of labour
-more elastic in long run than short run(time period)
-availability of a pool of unemployed labour increases the elasticity supply of labour(full employment has the opposite effect)
Diagram for market supply of labour
