hot topic: labour market Flashcards
what are the types of market failure in the labour market
- occupational immobility
- geographical immobility
what does labour immobility lead to(2)
- excess supply in one industry(results in lower wages)
- excess demand in another(higher wages)
what is the wage determination in perfect competition
- wages are determined by supply and demand(if workers are not payed the same then they would move to another industry)
what is the point where monopsonies employ labour
at MC= D
what are the arguments for national minimm wage
- fair wage for everyone
- reduces poverty(targeted at lower income groups
- more content workforce(assumes everyone is motivated by money)
arguments against the national minimum wage
- raises costs for companies
benefits of maximum wages(2)
- reduces inequality
- reduces the costs for firms(public sector)
what are the downsides of maximum wages
- loss of best workers(can lead to loss of competitiveness)
what are evaluation points for max and min wages
- depends on elasticities for supply and demand for labour
what are the wages in the public secotr determined by
- the wages in the private sector(if wages are too low in the public then workers move to private -> so public secotr increases wages)
what are interventions to labour immobility
- improve the supply of houses/ reduce the price of properties
- encourage further education(encouraging engineering degrees -> since there was a shortage)
what are the 2 conditions for TU in a monopsony market
- TU controls the supply of labour
- strong TU make smonopsony a wage taker
what is the point where monopsonists stop hiring workers
MRP(D) = MC
what is evaluation point for TU in monopsonies
- depends on the trade union density(power)
- however wages that are too high can lead to inefficiencies in the market(wages>MRP)
what are the benefits of trade unions for workers(2)
- workers receive higher wages compaed to non- trade union workers
- better non-wage benefits such as guaranteed lunchbreaks(which can increase productivity)
what are the cons of trade unions to workers(3)
- workers do not get payed whilst on strike
- can disrupt economikc activity whilst workers are on strike
- can result in conflicts between management and workers
what are the pros of trade unions for firms(2)
- training from trade unions increases workers productivity which decreases costs
- empowerment results in higher motivation( less sick days -> greater output for the firm)
what are the pros of trade unions for the economy/ government(3)
- trade unions help create a more equal society
- a firms profits increase due to increased productivity(more corporation tax)
- higher wages(more income tax)
what are the cons of trade unions for the economy/ government(3)
- industrial actions reduces output and firm’s profits(less tax)
- industrial actions may be disruptive to people’s lives especially in rail(getting to work)
- MNCs may be more reluctant to invest(high amounts of industrial action)
what are the cons for trade unions for firms(2)
- meeting unions demand can lead to increased costs(reduced output and profits)
- management styles need to be less authoritive which mnagers may find it hard to accept(which may becrease managerial forces-> less pressure)
