Labour Markets Flashcards
Marginal revenue product equation
MR x MP
What is MRP
The additional value of output produced by employing an additional worker
Demand for labour definition
The quantity of workers an employee is willing and able to hire at each and every wage rate
Shifts in labour demand (4)
Demand for final product
Productivity
Subsidies
Price of final product
What does WEDL stand for?
Wage elasticity of demand for labour
WEDL equation
% change in QD for labour
————————————-
% change in wage rate
WEDL definition
The responsiveness of demand for labour when there is a change in the wage rate
Factors affecting WEDL
Labour as a % total costs
Ease of factor substitution
PED of final product
Time to respond to wage change
Labour costs as a % of total costs effect on redundancies
If this is high: increase in min wage will lead to a lot of redundancies
If this is low: increase in min wage will lead to few redundancies
Ease of factor substitution
If capital can more easily replace labour EDL is likely to be elastic
WEDL explain how PED effects this
If PED is inelastic they can cover higher labour costs via increased prices, if elastic they cannot
Supply for labour
The quantity of work willing and able to work at each and every wage rate
Shifts in labour s-curves (6)
Relative pay
Entry requirements
Value of lesiure time
Extras (gym membership)
Labour force
Subsidy
WESL stands for?
Wage elasticity for supply of labour
WESL equation
% change in QS for labour
———————————
% change in wage rate
