Evaluating features of the labour market

Question 1

What is the difference between labour market flexibility and mobility

Answer 1

Labour market flexibility is how quickly the market can respond to changes in the economy ie increased demand, and mobility is how capable they are of filling these changes

Question 2

Whats the difference between individual bargaining and collective bargaining?

Answer 2

Individual bargaining is where one employee negotiates higher wages whereas collective bargaining is done by a group of people ie a trade union

Question 3

What is productivity bargaining?

Answer 3

Bargaining for higher wages by ensuring an increase in the productivity of the labour being offered

Question 4

What are informal labour markets and what determines their significance

Answer 4

where workers work informally for ‘cash in hand’ and don’t pay taxes on it, showing that the benefits of informal labour outweighs the potential fines, owing to a lack of government intervention
-the size of the informal market determines its significance

Question 5

What factors affect the labour market flexibility and what determines the significance of it?

Answer 5

• length of time to train
• substitutability of labour,
• number of employed workers and migration

significance depends on the cause of the change and intervention of trade unions- trade unions create barriers to entry, making it harder for new workers to fill vacancies

Question 6

How does migration affect the labour market?

Answer 6

increases the size of the labour force and allows better qualified workers to be sourced

Question 7

What is discrimination and how does it affect the labour market?

Answer 7

Leads to hiring and promoting workers with inferior skills to the best candidates, lowering productivity and output

Question 8

How do incentives affect the labour market?

Answer 8

• high salaries and bonuses lead to higher incentives to work for workers as a whole group
• for individuals this is shown as the substitution effect of workers substituting free time for higher pay, but at high levels the income effect may over power the substitution effect, leading to the backwards bending supply curve for Labour

Question 9

What government policies can be used to reduce labour immobility??

Answer 9

• supporting apprenticeships and providing paid training/ retraining to increase the transferable skills of the workforce, allowing them to interchange jobs better
• subsidised/ paid for evening classes mean that it is more affordable to retrain instead of having to lose out from work to retrain and therefore pay

Question 10

What factors affect the effectiveness of the government polices helping Labour mobility?

Answer 10

• size of the subsidy or apprentice pay. the more they offer to apprenticeships, the more likely that workers will substitute their higher paid jobs for lower paid jobs
• quality and availability of evening classes; the better and more frequent the classes, the more attractive they become, allowing more people to retrain and therefore increasing mobility by more

Question 11

What government policies are there to increase labour flexibility?

Answer 11

-reducing trade union power to ensure there are lower barriers to entry and restriction in workforces because of the minimum wages, there is less chance of disequilibrium in the labour market as wages wont be ‘sticky downwards’ no minimum wage