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Economics > Labour Demand and Supply > Flashcards

Labour Demand and Supply Flashcards

1
Q

A labor marker

A

A labour market is where individuals seeking employment interact with employees who want to obtain the most appropriate labour skills for their production process

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2
Q

What is the labour of demand based from

A

The labour of demand is a derived demand from the demand for goods and services within the economy.

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3
Q

What are the influences on a firm’s demand for labour?

A
  1. The output of the firm (most significant)
  2. The productivity of the firm
  3. The costs of other inputs
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4
Q

Aggregate demand

A

Refers to the total demand for goods and services within the economy. Components of aggregate demand are; consumption (C), investment (I), government spending (G) and net exports (X-M)

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5
Q

What happens when the economy is strong?

A

The firm will produce more
The demand for labour will increase
Which is reflected in the business cycle

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6
Q

Why is there a time lag?

A

Firms tend to not always to utilise their resources and instead hoard labour - delaying making staff redundant

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7
Q

Productivity of Labour

A

The output per unit of labour per unit of time

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8
Q

Increase in productivity short run

A

Aggregate demand up - demand labour up
Aggregate demand same - demand labour down (EXCESS IN CAPACITY)
Aggregate demand down - demand labour far down

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9
Q

Increase in productivity long run

A

Labour-intensive production methods
- No use of technology (too expensive)
- Productivity up
- Labour Demand up

Technology (capital) production methods
- Productivity up
- Labour Demand down
- Cheaper in long run

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10
Q

Capital

A

Is the manufactured products used to produce goods and services, commonly described as “the produced means of production”.

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11
Q

What are the 2 choices of production?

A
  1. Using labour more intensively
  2. Relying more heavily on technology and automated process
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12
Q

Labour productivity

A

labour input

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13
Q

Effects of the introduction of capital

A
  1. Overall cost reduction
  2. Reduction of labor
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14
Q

What is the elasticity of labour?

A

ELASTIC when:
- Easy to substitute between labour and capital.
- Labour costs are a higher proportion of its cost
- Difficult for the firm to pass increased labour costs to consumers.

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15
Q

What are the 6 output factors?

A
  1. General economic conditions (aggregate demand)
  2. Conditions in the firm’s industry
  3. Demand for an individuals firm’s products
  4. Productivity of labour verse other inputs (capital/interest/tax)
  5. Cost of labour versus other inputs
  6. Cost of labour versus the cost of foreign labour
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16
Q

What are the 6 factors affecting the supply of labour?

A
  1. Pay levels
  2. Working conditions
  3. Education, skill, and experience requirements
  4. Mobility of labour: occupational and geographical
  5. Participation rate
  6. Other: goverment
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17
Q

How do pay levels affect supply?

A

The higher the wage/salary the more willing people are to supply their labour

Non-wage incentives such as a company car, and superannuation benefits

18
Q

How does working conditions affect supply?

A
  1. Ability to travel
  2. Flexible working hours
  3. Opportunity to work from home
  4. Generous holiday leave entitlements
  5. Pleasent working environment
  6. Excellent training /experiences
  7. Meanignful / satisfactory work
19
Q

Human capital

A

The total sum of the knowledge, skills, training, and experience of workers that contributes to the process of production. It reflects the “quality” of a labor force and it is the main influence on productivity growth.

20
Q

How does occupational mobility affect the supply of labour?

A

If their is a higher degree of education and skills required for a particular occupation and more time is taken to move into that occupation then the moblity of the job is limited therfore limtied supply.

21
Q

Occupational mobility

A

The ability of labour to move between different occupations in reposne to wage differntials and employmemt oppoertunites.

22
Q

Geographical mobility

A

The ability of labour to move between different locations in reposne to improved wage differntials and employmemt oppoertunites.

23
Q

What limtis geographical mobility?

A
  1. Cost of moving (transport, real estate costs, travel)
  2. Perosnal upheaveal assossicated with moving (family, children)
24
Q

Geographical mobility affect on supply of labour?

A
  • Less supply of la
25
Q

Working-age popualtion

A

Is the number of people in an economy who are at least 15 years old

26
Q

Labour force (workforce)

A

Consits of all the employed and unemployed perons in the country at any given time

27
Q

Labour force particaption rate

A

The percentage of the civlian population aged 15 years and older who are in the workforce (either working or actavley seeking)

28
Q

Labour force particaption rate equation

A

Labour force
—————————– x 100%
Population aged 15+

29
Q

Why might people not work?

A
  1. Study
  2. Take care of family
  3. Want to rely on other forms of income
  4. Concentrate on lesiure activites
  5. Beilve they are unlikey to find a job
30
Q

What may affect the participation rate?

A
  1. State of the economy (most important)
  2. Ageing population and age of retirement
  3. Social atttiudes (women)
  4. Increased school retention rates
31
Q

Which professional associations limit their supply?

A

Doctor, engineer, and lawyer

32
Q

How does government affect supply?
(entry into occupation and population)

A

Immigration and imposing certain qualifications and license restrictions

33
Q

Unemployment

A

This refers to a situation where individuals want to work but are unable to find a job, and as a result, labor resources in an economy are not utilized.

34
Q

What are the 2 most important aspects of a workforce?

A
  1. Size
  2. Quality
35
Q

What affects the workforce?

A
  1. Size of population
  2. Age distribution
36
Q

Charatsitics of being employed

A
  • 15+
  • Employed at least 1 hr per week
  • Paid leave strike, workers comp
  • Unemplued but actively seeking
37
Q

Charatsitics of being unemployed

A
  • Retired
  • Under 15
  • performing full-time domestic duties
  • Full-time non-working student
  • Without a job but available for ir not actively seeking (illness)
38
Q

Natural increase

A

Excess in births over deaths in the population taken over a period of one year

39
Q

Net migration

A

Excess of permanent new arrivals to our country over permanent departures over a period of a one year

40
Q

Net migration

A

Excess of permanent new arrivals to our country over permanent departures over a period of a one year

41
Q

What effects net migration?

A

Economic activity:
- Times of depressed economy and high unemployment government reduces migration.
- Strong economic growth and labor shortages the government will raise Australian migration quotas.

Economics (9 decks)

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