Labour Markets Flashcards
A labour market is…
where individuals seeking employment interact with employers who obtain the most appropriate labour skills for their production process.
Economies do not have a single labour market…
Instead they have many distinct labour markets.
Labour markets can be segmented by… (4)
- Individuals firms
- Industries
- Local areas
- Occupations
Labour is a derived demand. Define Derived Demand…
A demand for a commodity which is a consequence of th demand for something else.
OUTPUT factors affecting demand of labour… 3
- General economic conds (aggregate demand)
- Conds in the firm’s industry
- Demand for individuals firms products
INPUT factors affecting demand of labour… 3
- Productivity of labour
- Cost of other inputs (capital)
- Cost of labour vs Foreign labour
A firms demand for labour will be elastic if… 3
- Substituting labour/capital is easy.
- Labour costs are a high proportion of total costs.
- Its hard to pass on increased labour costs (with higher prices) to consumers.
Factors in the Supply of Labour… 6
- Pay Levels.
- Working Conditions.
- Education/Skills/Experience Requirments.
- Mobility of Labour (Occupational and Geographical).
- Labour force participation rate.
- Govt policy decisions (eg Licence’s given out).
“The workforce” is people who
Aged 15 or above, and working or actively seeking work.
On paid leave, on strike, receiving workers comp are still….
Included in workforce.
Full time domestic duties, full-time non-working students, without a job but not seeking work (eg sicknesss)
Not included in workforce.
There are two important aspects of the workforce…
and they are affected by… (3)
1 Size 2 Quality ----- Size of population Age of pop Educational Patterns
Size of population impacted by…2
Net migration.
Natural population increase.
In times of boom, to increase population size, GOVT may…
Increase migration quotas
Aging workforce of recent years… Why? Why a problem?
Better health standards and higher living standards. Problem as greater workforce needed to support aged people.
Workforce quality mostly determined by… (2)
Education.
More education = Higher paid/More productive
Participation rate =
Labour force/Participation Rate x 100.
In long run, Nations economic growth and living standards determined by… (3)
Population Growth.
Productivity growth.
Participation rate.
Nominal Wage…
Number figure of wage.
Real Wage…
Nominal wage adjusted for inflation. ie Purchasing power of wage.
Employers can generally afford higher real wages if there is also increase in…
Productivity.
Differences in wage outcomes are caused by (different jobs)… (3)
- Skills and Education required.
- Working conditions (worse = higher paid).
- Occupational mobility (high = lower paid, since supply is high).
Different wages in same occupations caused by… (6)
- Geographical mobility (isolated location = higher wage).
- The productivity of labour.
- Capacity of firm to pay (successful firm = high pay)
- Age/Experience
- Gender (discrimination).
- Migrant status and background (skilled migrants/ english speaking proficiency).
Define enterprise bargaining…
Negotiations between employers and employees (or thier representatives) about pay and working conditions at an individual firm.
During 1980s wages were mostly…
Set by the award wages system. (Made by the Fair Work Commission).
Shift towards greater income distribution was caused by..
Shift to enterprise bargaining from award wages system.
Different wage outcomes across different industries can also be caused by…
Restructuring of the economy. New industries; short supply - high pay. Declining industries; falling demand - lower pay.
Falling union membership’s effect on income distributioin.
Creates greater variation in wage outcomes for similar jobs in different firms/industries.
Examples of non-wage outcomes. 4
- Sick/holiday leave
- Super
- Salary packaging (car, laptop, phone etc)
- Bonus cash payments (reward bonus due to person/firm succsess)
Non-wage outcomes are…
benefits employees receive in addition to ordinary and overtime payments.
