Labour Markets Flashcards
What is the labour market?
Where workers sell their labour and employers buy the labour-it consists of households’supply of labour and firms’ demand for labour
What do wages do?How are they determined?
- Wages provide an income to households but represent a cost to firms
- the interaction between supply and demand for labour gives wages-in a free competitive market economy its solely based on it HOWEVER in most economies both GOVERNMENTS AND TRADE UNIONS exert Influence on it
What is a trade union?
A trade union is an organisation of workers that is active on behalf of its members eg.increasing wages,salaries and working conditions
What is the role of the Labour market?
To enable workers who are willing and able to sell their labour meet employers willing and able to -offer them a job-and determine the wage rate
IN THEORY EMPLOYERS SIGNAL TO INDIVIDUALS WHICH JOBS ARE IN SHORT SUPPLY AND HAVE HIGHER PAY ATTRACTING MORE PEOPLE TO THE AREA
What is the difference between salary and pay?
Salary is a yearly wage equally divided into 12 monthly parts
Pay can be used in place of salary and wages-it stands for the amount a worker earns
What are the different types of labour markets?
Local-within a short commuting distance of the workers home
National-covers the whole of the UK
International-covering whole wor.d
Labour markets consists of smaller markets for different….
- qualifications1some have specific requirements
- skills-others may have specific skills additional to qualifications
- geographical locations
Labour markets also depend on information exchange about:
- wage rates
- conditions of employment
- level of competition
- location etc
Why can’t workers always move between jobs‽
- lack skills required eg train driver can’t be engineer
- unable or unwilling to relocate to diff part of differences country eg.due to language
- personal factors eg.family ties that restrict certain jobs,locations
- lack of info available-due to information failure
Overall the labour market acts as a -_______ market in times of low unemployment than during periods of fall in gdp (when economy is doing badly)
Overall the labour market acts as a free market in times of low unemployment than during periods of fall in gdp (when economy is doing badly)
What is meant by interaction of workers and employers?
- interactions take place in a variety of different ways
- in many jobs individual workers interact directly with their workers to establish wages and working conditions eg.if workers want a pay rise ,they discuss it with their employers .
What is meant by collective bargaining?
Collective bargaining is when trade unions negotiate with employers on behalf of its members to set wage rate and working conditions. Eg.if they want a pay rise they discuss it with their employer
In this case wage rate applies to whole occupation
What is equilibrium wage?
Where supply=demand
What is equilibrium wage?
Where supply=demand
What are the factors affecting demand for labour
Demand for product that labour help produce-this is DERIVED DEMAND -If consumers want more of a good or a service more firms will want the workers who make the product demand, therefore increases
- the state of the economy if the economy is growing more labour is likely to be demanded as existing firms are expanding Aren’t more new firms are joining
- Wage rates the downward slope of the demand curve shows that there is an inverse relationship between demand for labour and the wage rate
- Real wages fall in real wages rates may persuade employers to employ more people or use more labour instead of capital
- productivity of labour if the productivity of labour rises labour becomes cheaper than capital leading to more people being employed
- profitability of firms, firms that are making large posits are likely to expand and therefore employ more labour
