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Microeconomics > Labour market and income inequality > Flashcards

Labour market and income inequality Flashcards

1
Q

when qty of labour supplied = qty of labour demanded, there is no

A

surplus or shortage

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2
Q

How does the demand for labour work?

A

derived demand

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3
Q

What is derived demand

A

when there is a greater demand for output, the number of workers demanded will be higher.

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4
Q

The demand curve will shift when what factors change

A

the price of the firm’s output
other factor prices
technology

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5
Q

When will there be a higher price of the firm’s output?

A

When there is a greater demand more output

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6
Q

When there is a higher price of the firm’s output, firms will be able to sell

A

more of it at a higher price, increase labour, to prooduce more

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7
Q

Prices of factors include

A

capital

land

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8
Q

Factors can be a _____ or _____ to labour

A

substitute

complement

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9
Q

What does technological improvement bring about?

A

labour productivity

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10
Q

WHen there is technological improvement, firms are more willing to pay for

A

more productive and skilful workers that can handle high tech production

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11
Q

What is the supply of labour affected by?

A

how people wish to allocate their time between work and leisure at different wage rates

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12
Q

What is a reservation wage?

A

it is the lowest wage rate at which they are willing to provide labour

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13
Q

The supply of labour is affected by

A

number of qualified people
the non-wage benefits of costs of the job
the wage rate and non-wage benefits in alternative jobs

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14
Q

What are some non-wage benefits of costs of the job

A

working environment
fringe benefits
status

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15
Q

What is a labour union?

A

organised group of workers

aims to improve welfare of members

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16
Q

How does a labour union improve the welfare of members?

A

wage increase
better working conditions
expanded job opportunities

17
Q

What is the main aim of the labour union?

A

higher wage rate

18
Q

When can the labour union secure a higher wage rate?

A

sufficient market power

19
Q

What are the ways to increase wage rate

A

restricting the supply of labour
imposing a minimum wage
increasing the demand for unionised labour

20
Q

How to restrict the supply of labour?

A

By having licensing

21
Q

What kinds of licensing are there

A

examinations to pass

degree programme

22
Q

What are the results of restricting the supply of labour?

A

higher wage rate

fall in employment

23
Q

Where is the minimum wage imposed?

A

Above the market equilibrium wage rate

24
Q

What is the result of the minimum wage rate?

A

surplus of labour (fall in employment)

higher wage rate

25
Q

How does the union bring about greater demand for unionised labour?

A

sponsoring training schemes
encouraging apprenticeship
on-the-job training and skills upgrading
become more productive

increase demand for the good produced
(urging consumers)

26
Q

What are the results of increasing demand for unionised labour?

A

rise in equilibrium wage rate

employment of labour

27
Q

Why is the demand for high skilled labour higher than the demand for low-skilled labour?

A

At any given level of employment, firms are willing and able to pay high-skilled workers a higher wage rate.

because they are more productive

28
Q

Why is the supply for high skilled labour lower than the supply for low-skilled labour?

A

At any given wage rate, the number of high-skilled workers available for work is lower.

requires sacrifice of time and money on the part of the workers to acquire skills

29
Q

The difference in equilibrium wage rate for high-skilled and low-skilled leads to

A

income inequality

30
Q

What is the curve called to show income inequality

A

lorenz curve

31
Q

What are the axis of lorenz curve

A

x-axis: % of population

y-axis: % of income

32
Q

The % of population is ranked from

A

bottom to top earners

33
Q

The further the line deviates from the line of equality, the higher the

A

income inequality

34
Q

Will an ageing population worsen income inequality? Why?

A

Yes
Elderly do not work
Larger prop of low income households will increase

35
Q

How do you reduce income inequality

A

welfare benefits
training and upgrading schemes
higher income tax for higher earners

Microeconomics (8 decks)

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