Labour Markets Flashcards
What 4 factors affect the DEMAND for labour?
1) Economic climate - is there strong economic growth? Is there a recession?
2) Demand for the final product.
3) Government regulation (eg. rules making it easier to sack workers)
4) Seasonal Demand (e.g. firms requiring additional workers around Christmas time)
What 5 factors affect the SUPPLY of labour?
1) Education
2) Government regulations (eg. a NMW)
3) Provision of benefits
4) Income tax rates
5) Population
What is labour in?
Labour is in derived demand.
How would a decrease in available benefits effect the supply for labour?
If the government removed benefits then people would not get enough money to live on. This would give people an incentive to work so the supply of labour would increase.
How would an increase in migration into an area effect the supply for labour?
Increased migration into an area would result in the area having a higher population so the supply of workers would increase.
How would an increase in income tax effect the supply for labour?
An increase in income tax may mean that an individual could claim more money from benefits from their income after their income tax has been paid. This would give them a disincentive to work which would reduce the supply of labour.
What is the current NMW?
£6.50/hr
Why should there be an NMW? (4 reasons)
1) Reduce inequality/poverty
> Ensures minimum wage so that people have enough money to live on.
2) Increases Living Standards
> People get paid more fairly which means there is less exploitation.
3) Increases employment
> An increased income per hour will mean there is more incentive to work so there will be more people seeking jobs.
4) Decreased reliance on benefits
> If the increased income is more than which is available on benefits then there will be an increased incentive to work, this means less people will claim benefits so the money can be spent on things such as healthcare and education.
Argument against NMW?
If the NMW is set too high then firms will be unable to pay it and will be forced to sack workers. This means they will have less money and struggle to live as well as a chance of increased reliance on benefits if this is their only method of income.
