Demand and supply in labour markets

Question 1

what are the factors that affect the labor market

Answer 1

trade union power

regulation

welfare payments and income tax rates

training

mobility of labour

Question 2

what are the impacts of migration on labour markets

Answer 2

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.

Question 3

what is meant by the flexibility of a labour market

Answer 3

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

Question 4

how does trade union power affect flexibility in labour markets

Answer 4

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

Question 5

how does regulation affect flexibility in labour markets

Question 6

how does welfare payments and income tax rates affect flexibility in labour markets

Answer 6

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.

Question 7

how does training affect flexibility in labour markets

Answer 7

more widely available training opportunities and a more skilled workforce makes the labour market more flexible

Question 8

how does mobility of labour affect flexibility of labour markets

Answer 8

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.

Question 9

what are the effects of statutory minimum wage on labour markets

Answer 9

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

Question 10

what is demand labour affected by

Answer 10

the wage rate

demand for products

productivity of labour

substitutes for labour

how profitable the firm is

the number of firms in the market

Question 11

what are the causes and implications of wage differentials

Answer 11

skills, qualification and training

formal education

wages and skills

pay gaps

Question 12

what is supply labour affected by

Answer 12

the wage rate

demographics of the population

migration

advantages of work

leisure time

trade unions

taxes and benefits

training

Question 13

how is demand for labour affected by demand for products

Question 14

how is demand for labour affected by productivity of labour

Question 15

how is demand for labour affected by how profitable the firm is

Answer 15

the higher the profits of the firm, the more labour they can afford to employ

Question 16

how is demand for labour affected by the number of firms in the market

Answer 16

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

Question 17

what is the labour market

Answer 17

it is a factor market

Question 18

who is the supply of labour determined by

Answer 18

The supply of labour is determined by those
who want to be employed (the employees)

Question 19

who is the demand of labour determined by

Answer 19

employers

Question 20

what is labour

Answer 20

a derived demand

Question 21

what does the demand of labour come from

Answer 21

the demand for labour comes from the demand for what it produces

Question 22

what is demand related to

Answer 22

Demand is related to how productive labour is and how much the product is
demanded

Question 23

what is the elasticity of demand linked to

Answer 23

The elasticity of demand for labour is linked to how price elastic the demand for the product is

Answer 24

The wage rate will lead to movements along the supply and demand curves for labour. All other factors will shift the curves

Question 25

what is the supply of labour calculated by

Answer 25

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

Question 26

how is the supply of labour affected by migration

Answer 26

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

Question 27

how is the supply of labour affected by advantages of work

Answer 27

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

Question 28

how is the supply of labour affected by leisure time

Answer 28

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

Question 29

how is the supply of labour affected by trade unions

Answer 29

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

Question 30

how is the supply of labour affected by taxes and benefits

Answer 30

If taxes are too high and benefits are too generous, people might be more inclined to withdraw from the labour market.

Question 31

how is the supply of labour affected by training

Answer 31

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.

Answer 32

Discrimination. Workers might be discriminated against due to age, disabilities, gender and race

Answer 33

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

Answer 34

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.

Answer 35

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.

Answer 36

Formal education. On average, those with a degree earn more over their lifetime than those who gain just A Levels

Answer 37

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.