Labour Markets Flashcards
Who demands and supplies labour?
Workers supply
Firms demand
Which 4 factors influence the demand for labour?
- The price of the product being produced
- The demand for the final product
- The ability to substitute capital for labour
- The productivity of labour
Which 8 factors influence the supply of labour?
- Training time
- Wages in other occupations
- Migration
- Income tax levels
- Working conditions
- Trade union power
- Welfare
- Social trends
How does training time influence the supply of labour?
Long training times lead to lower supply of labour
How does income tax affect the supply of labour?
Higher income tax rates decrease the supply of labour
How do trade unions impact the supply of labour?
Stronger unions attract more workers, raising supply of labour
What are the 2 main causes of market failure in the labour market?
- Geographical immobility of labour (difficult movement between locations)
- Occupational mobility of labour (easy to change jobs)
What are 6 current labour market issues in the UK?
- Skills shortages
- Youth unemployment
- Changes to retirement ages
- School leaving age
- Zero-hour contracts
- Temporary/flexible working
In which 3 ways can the government interfere in the labour market?
- Minimum wage
- Maximum wage
- Public sector wage-setting
Which 4 policies can be used to tackle labour market immobility?
- Improving education and training
- Subsidising employers
- Subsidising workers who relocate
- Reducing information asymmetry
Which 4 factors influence the PED of labour?
- The proportion of labour costs to total costs (higher -> more elastic)
- PED of the final product (elastic -> more elastic)
- Ease and cost of factor substitution (easier automation -> more elastic)
- Time period (long-run -> more elastic)
