Labour Market 15th March Flashcards
Define labour supply
The labour supply is defined as the number of hours of work people are able and willing to supply at a given wage rate.
Factors that affect the labour supply
Real wage rate Extra Pay Wages in substitute occupations Barriers to entry Improvements in occupational mobility of labour Non monetary factors Net migration of labour
Approximate net inward migration in 2015
300.000 people every year
What is the main aim of supply side policies in the labour market
increase the active labour supply and therefore increase productivita
Four main supply side policies
Income tax free personal allowance
Income tax threshold
Free childcare
Minimum wage
Definition Marginal Revenue Product of Labour
Extra revenue generated when an additional worker is employed
Where does a profit max. company employ?
Where MRPL=MCL
What does the elasticity of demand for labour depend on?
Labour cost as a % of total cost
Ease and costs of substitution
Price elasticity of demand for the final product
What does the effectiveness of the minimum wage depend on?
The elasticity of demand for labour
Characteristics of a monopsony employer
Buying power of labour - giving them wage setting power
Monopsony diagram
Downwards sloping Demand Curve
Upwards sloping Labour Supply and Average Cost of Labour Curve
Steeper upwards sloping Marginal Cost of Labour curve
What are the two biggest unions in the UK
UNITE and UNISON both more than one million members
How many people are part of a trade union in the UK?
6.56 million people in 2020, been rising for the past four years
Union members in the UK are mostly part of which sectors?
public sector jobs
What is the National Living Wage in 2022
April 2022, 9.50 pounds
Define minimum wage
A statutory pay floor that cannot be undercut
What does the impact of the Minimum wage depend upon?
Where it is set (how high) and the elasticity of demand for labour
Which jobs are likely to have a elastic supply of labour
low skilled jobs- low entry barriers
What is the wage premium for union members?
approx. 15%
What are transfer earnings
Minimum reward to keep a factor of production employed in its current position, area below the labour supply curve
What is economic rent?
area above the labour supply curve, any amount earned higher than the minimum required
What is meant by “labour-shedding” or “downsizing”
Reducing the workforce in a recession-leading to cyclical or demand deficient unemployment
What is income
a flow of money
What is wealth
current value of a stock of assets
Supply side issue related to unemployment
Structural unemployment
When does structural unemployment occur?
When there is a significant change in the patterns of employment in an industry- for example automatisation or deindustrialisation
3 Structural barriers to people finding work
Skil gaps- high costs of retraining
disincentives created by the poverty trap
unaffordable housing
