Demand and supply in labour markets Flashcards
what are the factors that affect the labor market
trade union power
regulation
welfare payments and income tax rates
training
mobility of labour
what are the impacts of migration on labour markets
there could be more competition toget a job due to the rise in the size of the working population. migrants tend to be of working age, and many are looking for a job.
migrants tend to bring high quality skills to the domestic workforce, which can increase productivity and increase the skillset of the labour market. this could increase global competitiveness.
migrant labour affects the wages of the lowest paid in the domestic labour market by bringing them down. however, this impact is only small. for the medium and higher income households, it is hard to find evidence of worker displacement or depressed wages.
the skills of migrant labour could substitute those of the domestic market so workers could be replaced. if the skills complement the domestic labour market, there could be a welfare gain through higher productivities.
what is meant by the flexibility of a labour market
the flexibility of labour market is how willing and able labour is to respond to changes in the conditions of the market. it is important for labour to be able to adjust to changes in demand, and it is vital for the supply- side of the economy
how does trade union power affect flexibility in labour markets
if trade unions are pushing for higher wages, the labour market is likely to be more flexible. trade unions can also increase job security. if trade unions limit the rights of a worker to strike, there could be a decline in flexibility
how does regulation affect flexibility in labour markets
how does welfare payments and income tax rates affect flexibility in labour markets
the reward for working should be high. if welfare payments are generous and income tax rates are high, labour market flexibility is likely to be lower.
how does training affect flexibility in labour markets
more widely available training opportunities and a more skilled workforce makes the labour market more flexible
how does mobility of labour affect flexibility of labour markets
the mobility of labour is the availability of workers to change between jobs
The geographical immobility of the factors of production refers to the obstacles which prevent the factors of production moving between areas. For example, labour might find it hard to find work due to family and social ties, the financial costs involved with moving, imperfect market knowledge on work and the regional variations in house prices and living costs across the UK.
The occupational immobility of the factors of production refers to the obstacles which prevent the factors of production changing their use. For example, labour might find it difficult to change the occupation. This occurred in the UK with the collapse of the mining industry, when workers did not have transferable skills to find other work. The causes include insufficient education, training and skills.
what are the effects of statutory minimum wage on labour markets
the national minimum wage is an example of a minimum price
minimum prices have to be set above the free market price, other wise they would be ineffective
it could make it harder for young people to find a job , because their lack of experience might not be valuable to firms
the government might make more tax revenue, due to more people earning higher wages.
a higher wage could make the country less competitive on a global scale, since they cannot compete with countries that that have lower wages
what is demand labour affected by
the wage rate
demand for products
productivity of labour
substitutes for labour
how profitable the firm is
the number of firms in the market
what are the causes and implications of wage differentials
skills, qualification and training
formal education
wages and skills
pay gaps
what is supply labour affected by
the wage rate
demographics of the population
migration
advantages of work
leisure time
trade unions
taxes and benefits
training
how is demand for labour affected by demand for products
how is demand for labour affected by productivity of labour
how is demand for labour affected by how profitable the firm is
the higher the profits of the firm, the more labour they can afford to employ
how is demand for labour affected by the number of firms in the market
This determines how many buyers of labour there is. if there is only one employer, the demand for labour is lower than if there are many employers
The lower demand for labour can mean wages are lower, so trade unions try to encourage higher wages
what is the labour market
it is a factor market
who is the supply of labour determined by
The supply of labour is determined by those
who want to be employed (the employees)
who is the demand of labour determined by
employers
what is labour
a derived demand
what does the demand of labour come from
the demand for labour comes from the demand for what it produces
what is demand related to
Demand is related to how productive labour is and how much the product is
demanded
what is the elasticity of demand linked to
The elasticity of demand for labour is linked to how price elastic the demand for the product is
The wage rate will lead to movements along the supply and demand curves for labour. All other factors will shift the curves
what is the supply of labour calculated by
The supply of labour is calculated by the number of workers willing and able to work at the current wage rate, multiplied by the number of hours they can work
how is the supply of labour affected by migration
Migrants are usually of working age, so the supply of labour at all wage rates tends to increase. Migration particularly affects the supply of labour at the lower wage rates, because migrants are usually from economies with average wages lower than the UK minimum wage
how is the supply of labour affected by advantages of work
This can influence how much people prefer to work, and is linked to non-monetary advantages. If the cost of working is lower, so families can afford childcare, people are more likely to work. If the benefits of working are high, such as holiday entitlements and the potential to be promoted, the supply of labour is likely to increase
how is the supply of labour affected by leisure time
Leisure is a substitute for work, which is why part-time work and early retirements are attractive options for some people.
People have to choose whether to spend their time on work or leisure. This is influence by age, the amount of taxes paid, how many dependents the worker has and income from not working
how is the supply of labour affected by trade unions
These could attract workers to the labour market, because they know their employment rights will be defended. However, the limits on workers, such as limiting their ability to strike, might cause some people to withdraw from the labour market
how is the supply of labour affected by taxes and benefits
If taxes are too high and benefits are too generous, people might be more inclined to withdraw from the labour market.
how is the supply of labour affected by training
If a lot of training or high qualifications are required for a job, then the supply of labour may fall. However, if the government subsidise training, it is easier for workers to gain the necessary skills for a job, so the supply of labour could increase.
Discrimination. Workers might be discriminated against due to age,
disabilities, gender and race
Gender. Even with equal pay laws, women still earn less than men on
average. This could be due to career breaks and fewer hours worked on
average than men, or because women are crowded into low-paid or parttime jobs, which may only require low skill levels. Women could also be
discriminated against when it comes to promotions, which effectively locks
out higher paying jobs. Although a gap still exists, it is narrowing
Pay gaps. The wage gap between skilled and unskilled workers has increased
in the UK recently. This is due to technological change and globalisation,
which has shifted production abroad.
Wages and skills. Skilled workers produce higher outputs than unskilled
workers because they are more productive, so the demand for their labour is
higher. This means they can demand higher wages.
Formal education. On average, those with a degree earn more over their lifetime than those who gain just A Levels
Skills, qualifications and training. Jobs which require more training and
education offer higher wages. Training workers is expensive for firms, so they compensate for this by offering workers, who have already undergone
education and training, higher wages.
