Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > Labour Market > Flashcards

Labour Market Flashcards

1
Q

What are the 2 Free-Market Decision Makers?

A

Households/Individuals

Firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define Commodities

A

Goods or Services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

In the PRODUCT MARKET, what 2 things flow between Households + Firms?

A

Goods + Services

Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

In the FACTOR MARKET, what 2 things flow between Households + Firms?

A

Income

Labour + Capital (Investments)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the Governments role in the Factor + Product Markets?

A

Establish an Environment for the Interactions to take place

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Who are the 3 actors in the Labour Market?

A

Households
Firms
Government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What decisions do Households make?

A

When to enter Labour Market
Which Occupation/Industry to work in
How many hours to work
Whether to Quit or Retire

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What decisions do firms make?

A

How many workers to hire
When to layoff workers/close plant
Pension/Retirement Policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How does a Government establish an environment of a Market?

A

Unemployment Insurance- Benefits
Worker Compensation
Laws to Protect Workers + Firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Who DEMANDS Labour?

A

Employers / Firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Where do Employers Demand Labour up to?

A

Up to point where Benefit = Price they Pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the benefit of Labour to an Employer?

A

Value of the G/S produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is Marginal Revenue?

A

Extra Revenue due to Product of Labour
Declines as more Labour is employed- Diminishing Marginal Returns
In S.R- additional labour Increase Output at a slower Rate
In L.R- all FoPs are variable- allows Expansion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are 3 factors that affect Demand for Labour?

A

Consumer Demand- Derived Demand- Increased Consumer Demand for G+S–> Increased D for Labour
Productivity of Labour- can be affected by Technology
Non-wage Costs of Hiring labour- Employer Taxes- N.I
–Ease of Laying off workers/Reducing Wages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Factors affecting Supply of Labour

A

Depends on Individual’s Skill- Training can Increase Supply
Outside options- e.g. Unemployment Benefits may be more attractive
Migration- Immigration can Increase Supply–> Reduce Wage Rate
Non-Monetary Characteristics- e.g. Working Conditions, Vocational aspect
Labour Market Regulations- Unions + Professional Bodies–Restrict Supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Where does Equilibrium occur in the Labour Market?

A

At Wage Rate + Employment Level where D=S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

In a Free Market, how much Unemployment should be Expected?

A

No Unemployment- Wages would fall until Market clears

If Wages can’t fall- Demand for Labour Falls causing Unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Name the 3 main things that affect Labour Supply

A

Population Growth
Participation
Education Decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Name 2 main Factors that Influence Labour Demand

A

Labour Costs

Output Prices- e.g. Free Trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the 3 Factors that Influence Market Outcomes?

A

Degree of Competition
Unemployment
Unions

21
Q

What are 5 Key Indicators in the Labour Market?

A 
Unemployment Rate
Labour Force
Participation Rate
Earnings/Wage Rate
Labour Productivity
22
Q

Define Unemployment Rate

A

Percentage of Labour Force without a Job but registered as willing + able to work

23
Q

Define Labour Force

A

those Holding a job or registered as being willing + able to work

24
Q

Define Participation Rate

A

Percentage of Population of Working Age declaring themselves to be in Labour Force

25
Q

What is the Wage Rate?

A

Average Weekly/Monthly Earnings of Workers in NOMINAL + REAL Terms

26
Q

What is Labour Productivity?

A

Output / Labour Input

Real Output per unit of Labour per period of time

27
Q

What policies can be used to Restore Equilibrium in the Labour Market?

A

Keynesian Demand policies

28
Q

How do Keynesian Demand policies restore Equilibrium in the Labour Market?

A

Increase Demand for G+S–> Increase Demand for Labour- Derived Demand
If Wages adjust- Demand Management not necessary to prevent Unemployment
Many Policies that Increase Demand–> May Reduce NRU

29
Q

What Supply-side Policies can be used?

A

Tax Cuts/Credits- e.g. Reduced Income Tax- Encourages Work
Trade Union Reform- End ‘Closed Shop’ Unions- Encourages Wages to adjust
Benefit Reforms- Increase Willingness to Work
Training + Retraining
Improve Efficiency of Labour Market–> Reduce Unemployment

30
Q

How is Labour Productivity measured?

A

GDP/capita (per hour)

Output/Input

31
Q

Why is Labour Productivity important?

A

Shows Efficiency of the Economy

Can be used to compare between different countries

32
Q

What are the 2 main current challenges to the UK?

A

Sluggish growth in Productivity- stagnant

BREXIT- emigration of skilled labour

33
Q

Define Minimum Wage

A

Lowest Wage that may legally be paid for an hours work- subject to Gov. restrictions

34
Q

What is the main justification for having a Minimum Wage?

A

Ensures a Living Wage- wage sufficient to keep a family out of poverty

35
Q

Why is Supply of Labour upwards sloping?

A

At higher wages, more people are willing to work

36
Q

Why is Demand for Labour downwards sloping?

A

Employers are willing to hire more labour at lower wages

37
Q

What happens if the M.W implemented is below the Equilibrium wage?

A

Companies would pay Eq. Wage, not M.W
Other companies would pay Eq. Wage- they would attract the workers
Marginal Revenue is still Positive

38
Q

What happens if the M.W implemented is above the Equilibrium wage?

A

More workers would be willing to work at the higher wage
Employers less willing to hire at the higher Wage
Excess Supply of Labour- Increased Unemployment

39
Q

What happens to Eq. Wage + Labour with a M.W above the Eq. Wage

A

Wage Increases- W* –> Wmin

Labour Decreases- L* –> Lmin

40
Q

How can the Money Gained from Wage rise be > Money lost from Unemployment?

A

If Demand for Labour is Inelastic

41
Q

What is the main Issue with M.W

A

UNEMPLOYMENT- Increase in number of people Willing to work–> Excess Supply
Current Workers want to work more hours
Increased CoPs- Employers hire at Lmin, not L*

42
Q

Who are the Winners + Losers of a M.W

A

Winners- Workers who benefit from the wage Increase + can still work as much as they want
Losers- Unemployed Workers- L*-Lmin

43
Q

What is an argument against M.W

A

Gain for Workers < Loss to Employers

DWL- Net loss to Society

44
Q

What are arguments in Favour of M.W

A

Increased Wage–> Increased Work Effort- Decrease Neg. Impact of Traditional analysis
If Demand for Labour is Inelastic- Small Neg. Impact of M.W

45
Q

What does the success of a M.W rely on?

A

Incomes of Poor families are Increased

There is Little/No Public/Social Cost

46
Q

2 Key Elements of Analysing M.W

A

Employment Effect- who benefits from increased earnings

Business Response- who pays for increased earnings

47
Q

What is the Employment Effect

A

Increase Income for Low-earners- help support families + children– FOR M.W
Low-wage workers become Unemployed + Decreases Income– AGAINST M.W
TRADE-OFF- Some low-wage workers WIN, some LOSE

48
Q

What is the Business Response

A

Increased CoPs–> Lower Profits- Firm Pays

  • -> Layoff Workers to maintain Profit Margin–> Increased Unemployment or Reduced Job Benefits- Worker Pays
  • -> Increased Prices- Consumer Pays

Economics (20 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions