Labour Markets

Question 1

Elasticity of labour demand

Answer 1

How responsive demand for labour is following a change in wage

Question 2

Factors influencing elasticity of labour demand

Answer 2

Substitutes (easy to replace for capital/unskilled labour=elastic)
Time (short run, little time to find subs)
Labour costs as proportion of TC (large=elastic, will try change)

Question 3

Elasticity of labour supply

Answer 3

How responsive supply of labour is following a change in wage

Question 4

Factors influencing elasticity of labour supply

Answer 4

Skills/Qualifications
Time (short run-little time to train/apply)
Unemployment (if high, more people able to work=elastic)

Question 5

Shifts in labour market

Answer 5

Derived demand
Productivity (eval)
Education+training/emigration
Capital costs
Non pecuniary benefits
Income tax (eval)
Benefits

Do parliament ever consider not increasing benefits

Question 6

2 labour market failures

Answer 6

Occupational immobility of labour

Geographical immobility of labour

Question 7

What does occupational immobility lead to

Answer 7

Structural unemployment-as don’t have the skills to move between jobs when there is a shift in the industry

Question 8

How to correct occupational immobility

Answer 8

Education
Training
Apprentice schemes

Question 9

Reasons for geographical immobility

Answer 9

Family ties
Expensive (house prices in LDN)
Time consuming

Question 10

How to correct geographical immobilty

Answer 10

Transport

Relocation subsidies to cover cost of moving

Question 11

Evaluating skills and qualifications on elasticity

Answer 11

Inelastic-time to get qualifications

Eval:retired skilled workers e.g doctors may come back, or skilled immigrants can