Labour Market Flashcards
Supply of Labour Factors
Retirement age - increasing age means more time working
Level of Qualifications Needed - lower levels means easier to enter occupation
University Fees - higher fees means more school leavers into jobs
Magnitude of JSA - incentivised to stay in JSA rather than find a job
House Prices - affects geographical mobility of labour
Net Migration - more people entering means larger supply pool
Non wage factors - flexibility, job satisfaction
Supply of Labour Factors Eval
State of Economy - workers may be discouraged to find work in recession
Prioritisation of Non-Pay Factors - workers may seek flexibility, safety etc
Magnitude of Factors Affecting Supply - Tips are important in hairdressing
Why does Govt increase NMW?
Incentivise workers to get off JSA and into job
Keeps up with inflation, keeps workers in the market
Reduces exploitation and inequality
Assuming workers are motivated by money, it could be that workforce is happier meaning more productive
How can Govt Failure be caused by NMW?
Firms can illegally employ workers at rates under NMW
Tax Evasion can occur
Firms be forced to fire workers - loss of govt rev
Firms lose out on profit - loss of corporation tax
Ineffective because no consideration of regional differences
Increase in NMW/Wages/Costs Analysis
Costs increase, profits decrease, firms may fire workers or leave market altogether, rendering employees unemployed
Factors affecting labour immobility
Geographical -
Willingness to move
House price differentials
Age
Knowledge of jobs in other areas
Occupational-
How specialised your industry is
Magnitude of funds for retraining
Methods to Reduce Immobility
Increase investment in training programmes - raises Q and Q of human capital, apprenticeships etc
Recruit skilled workers from overseas - increases geographical mobility of labour
Retain workforce - offer higher pay, more flexible hours, pensions
Raise retirement age - older workers have higher levels of human capital and should be retained as long as possible
Methods to Reduce Immobility Eval
Training programs have high cost to businesses/govt, introduces opp cost on where to provide training, takes long time to see effects of
Overseas recruitment could cause high staff turnover if they intend to return home, language barrier, may not have the correct qualifications and skills needed
Demand of Labour Factors
Wage Rates - as wage increases, MRP must be higher to make extra employment worthwhile, making demand lower
Demand for product - labour is a derived demand
Price of other factors of production - capital may take over labour
Wages in other countries - firms will move abroad, making domestic demand low
Regulation - High regulation within labour markets can discourage employment EG france
Wages in perfect comp
All workers paid the same
Purely supply and demand
Monopsony market Labour Wages
Only one buyer of labour
Firms have to increase wages to hire people
Employ less people at a lower rate than perfect comp
Draw diagram
Labour monopoly market
Trade unions become single seller of labour via collective bargaining
They increase barriers of entry
OR
Set specific wage rate under which employees will not work
Higher wages, but fall in employment
Govt intervention tackling immobility
Improve housing supply
Improve transport links
National advertising
Move employers to diff locations to avoid excess demand in one area
Training provide during work
Education surrounding interview skills
