Labour Markets Flashcards
Labour Market
Any situation in which the buyers and sellers of labour are brought into contact to exchange labour for payment
Demand for Labour
The quantity of labour that businesses will ‘purchase’ at various wage rates
Derived Demand
A demand for a commodity, service, etc. which is a consequence of the demand for something else
Determinants of Labour Demand
Wage Rates
Business Output Levels
Productivity of Labour
Cost of Other Inputs
Supply of Labour
The quantity of labour that households are willing to supply at different wages
Determinants of the Supply of Labour
Pay Levels & Working Conditions
Education, Skills & Experience
Occupational & Geographical Mobility
The Labour Force Participation Rate
The Workforce
That section of the population 15 years of age and above who are either working or actively seeking work
The Labour Force Participation Rate
The number of people over 15 working or looking for work
A person is defined as being employed if…
They have one or more hours of work per week
A person is defined as unemployed if…
They are currently available for for work, are actively seeking work, and are unable to find it
Uneployment Rate Formula
Number of Persons Employed/Labour Force
Types of Unemployment
Structural Unemployment
Cyclical Unemployment
Frictional Unemployment
Seasonal Unemployment
Long-Term Unemployment
Hidden Unemployment
Hardcore Unemployment
Nominal Wages
The wage outcomes of employees without taking inflation into consideration
Real Wages
Wage outcomes adjusted for inflation, measure income’s ‘purchasing power’
Determinants of Income
Occupation
Productivity
Age
Gender
Ethnic & Cultural Background
Income Distribution
The way in which an economy’s income is spread among the members of different social and socio-economic groups
Awards
the minimum wages & working conditions for all employees in a particular industry
Enterprise Bargaining
the employer and employees negotiate about pay and work conditions at the level of the individual firm, popular over the last three decades
Non-Wage Outcomes
Holidays
Awards
Flexible Work Times
Childcare
Economic Benefits of Income Inequality
Encourages the workforce to increase skills and education, as well as to work longer and harder
Encourages entrepreneurs to take take risks
Economic Costs of Income Inequality
Decrease in overall utility/satisfaction
Decreased economic growth - high income earners have a high MPS, so increasing inequality may lead to decreased consumption & economic activity
Conspicuous Consumption - purchasing a product to be ‘seen’, not to satisfy a need
Social Costs of Income Inequality
Creation of Social Classes
Poverty creates social problems such as crime, drug & alcohol abuse, and suicide
Industrial Relations
The relationship between employers and employees in terms of wages and working conditions
Unions
These are associations that represent employees in the industrial relations system
They aim to improve the wages and working conditions of their members at industrial tribunal hearings and by lobbying the government
Employer Associations
These are organisations that represent the interests of employers
The represent their members at industrial tribunals and lobby with the government
Australia’s main Industrial Tribunal
Fair Work Commission
