labour market Flashcards
derived demand
demand that comes from demand from something else
Marginal revenue product of labour
extra revenue generated by an additional worker emplyed
MRPL formula
marginal product of labour x marginal revenue
reasons for diminishing returns when employing additional workers
lack of space
lack of resources
lack of machinery
evaluate MRP
hard to measure productivity
hard to establish individual efficiency
some are self employed
factors influencing demand for labour
wage rate
demand for products
profitability
taxes
number of buyers
substitutes
productivity of labour
productivity of machinery
factors influencing supply for labour
wage rate
length of training
work population
migration
subsidies
advantages of work
preferences
mobility of labour
benefits
substitution effect
as wage goes up, work is more attractive than leisure
income effect
as wage goes up even further, work is consumed less than leisure because target income is achieved quicker
backward bending supply curve of labour
where substitution effect is overtaken by income effect because target income has been reached
is high skilled labour elastic or inelastic
inelastic supply and demand
why is low skilled labour elastic supply
because there is a large amount of this labour
benefits of min wage
higher productivity
reduce poverty
increase incentive to work
increase investment
counterbalance monopsony effect
problems with min wage
vulnerable to living wage
regional variations
cost push inflation
workers stuck on minimum
informal market increase
limited impact on relative poverty
mobility of labour
how easy workers can move to different jobs
