Labour Markets - Unit 1 Flashcards
Where does labour demand arise from?
Firms that are willing and able to employ workers (derived demand)
What is derived demand?
Demand for something and what it can produce
Demand for labour will arise if:
- Demand for a product rises
- Workers become more productive
- Government reduces costs of employing people
What is elasticity of demand for labour affected by?
Price elasticity of demand for a product
Where does supply of labour arise from?
Individuals offering themselves for employment
What are limitations to response of labour?
Occupational and geographical immobility
(4) What does supply of labour depend on?
- Size and structure of population
- Skill levels required
- opportunity cost of work
- Education and training availability and cost
(4) Supply of labour will rise if:
- benefits are lowered
- Income tax falls
- Improvements in working conditions occur
- Population available to work rises
What is elasticity of supply of labour affected by?
Skill levels required
What happens if you lower skill requirements?
The more elastic the supply to change in wages
What are wage rates determined by?
The interaction of demand and supply
Define Gross income:
amount earned before deductions
Define Net income:
amount a worker actually takes home after deductions
Define Nominal income:
the actual amount payed
Define real income:
amount payed after the effect of inflation
