Labour market Flashcards
Why does demand for labour fall as wages rise?
Demand for labor falls as wages rise due to the increase in production costs that come with the rise of wages resulting in firms cutting production costs by laying off workers
What is the concept of “derived demand” in labour economics?
“Derived demand” is the concept that the demand for labour is derived from the demand for the goods and services supplied by firms
How does the availability of substitutes affect the demand for labour?
If people are replaced by machinery, the demand for labour may be affected. This may happen if firms believe that machines are much more efficient and cheaper than people.
How does the productivity of labour affect the demand for labour?
If every worker is able to produce more output, demand for labor increases as production becomes more profitable, provided that the extra output can be sold.
How does population size affect the supply of labour?
As the population grows, there will be more people available to work, therefore, the supply of labour increases over time.
How does migration affect the supply of labour?
Many countries welcome immigrants to increase the number of people working in their country, which can affect the supply of labour.
Why is the quality of labour important to businesses?
A business has to consider whether the labor available meets the skills required to maintain quality standards. Businesses need access to sufficient numbers of skilled workers in order to minimize costs, operate more efficiently, and make more profit.
How does training affect the productivity of a firm?
Training provides the workers with the skills and knowledge needed to do their job more effectively, resulting in the productivity of a firm to increase. In addition, training may also boost the employees’ incentives to work.
What are trade unions
Organizations that advocate for the rights and interests of workers, such as by negotiating with employers for higher wages and improved working conditions
Aims of trade unions?
To negotiate pay and working conditions with employers
Provide legal protection for members like representation in court
Put pressure on the government to pass legislation that improve the rights of workers
Provide financial benefits like strike pay when necessary
When can trade unions may be able to force up wages in labour markets?
If it has full support of its members hence, it can put pressure on employers when it comes to wage negotiations
What are drawbacks of trade unions?
The higher the wages, the fewer the employed workers as demand for labour falls when wages increase
How can job losses be avoided when it comes to trade unions?
If labour productivity rises at the same time
If profit margins are reduced
If employers are able to pass on wage increase to consumers in the form of price increases
