Labour market - wage determination Flashcards
economic rent d
the payment received by a factor of production over and above that which is needed to keep it in its present occupation
transfer earnings d
the minimum payment needed to keep a factor of production in its present use
what’s another way of saying transfer earnings (labour market)
the opportunity cost of a factor performing its current role
equation for economic rent
total earnings minus transfer earnings
what does economic rent depend on
elasticity of supply of labour
trade union d
an organisation of workers who join together to further their own interests
trade union mark up d
the addition to wages secured by members of a trade union, compared to what they would earn if there were no union
what method do trade unions use to further the interests of its members
‘collective bargaining’
monopsonist d
a single, dominant buyer
what can firms who employ a high percentage of workers in a labour market do
influence the wage rate
example of a monopsonist
government, main employer of soldiers
monopsonists are ______ ______
price makers, they dictate the wage rate
why is the marginal cost of labour greater than the average cost of labour
because the employer not only pays the new worker a higher wage rate but has to increase the rate for all other workers
wage differentials d
differences in wages arising between individuals, occupations, industries, firms and regions
explain wage differentials between skilled and unskilled workers
skilled workers receive more because demand is higher and there are fewer in supply, MRP is higher because they generate higher output per worker
explain wage differentials between male and female workers
men receive higher pay than women, smaller percentage of women are members of trade unions, miss promotion to have children, some employers undervalue MR productivity of female workers
explain wage differentials between full and part-time workers
part-time receive lower hourly wage, supply greater than demand, receive less training so MR productivity lower, less likely to be member of trade union
explain wage differentials between ethnic origin
workers from ethnic minorities receive lower wages, qualifications, low skilled jobs, discrimination
discrimination d
where groups of workers are treated differently to other workers in the same job regarding pay and employment
labour market failure d
where the free market fails to achieve an efficient allocation of resources in the labour market
negative discrimination d
when a group of workers is treated less favourably than others
positive discrimination d
when a group of workers are treated more favourably than others
what is discrimination a cause of
market failure
when does negative discrimination occur
when workers of similar ability are paid lower wages because of race, gender, age or disability
