Micro 44 labour supply Flashcards
What 2 factors determine labour supply?
- Monetary factors.
- Non-monetary factors.
Give 1 monetary factor that determines labour supply?
Wage rate - Higher the wage, higher the supply as greater incentives.
Explain immigration as a non-monetary factor that determines labour supply?
More immigration - more supply of labour as more workers are available.
Explain brain drain as a non-monetary factor that determines labour supply?
Skilled labour forces leave the country because of better opportunities elsewhere. Eg: NHS workers leaving the country to higher paying ones like australia.
Explain demographic factors as a non-monetary factor that determines labour supply?
Eg: number of working age people in a country. Japan has an ageing population which means supply of labour in the long run shifts left.
Explain barriers to entry as a non-monetary factor that determines labour supply?
Degree, Visas, Qualifications, etc. High barriers to entry leads to inelastic supply of labour like doctors.
Define the elasticity of supply of labour?
Measures the responsiveness of the change in labour quantity supplied due to the change in wages.
What is the equation for the elasticity of supply of labour?
% change in quantity supplied / % change in wages.
Explain “time” as a factor that influences the elasticity of supply of labour?
Over time, labour supply increases since wages also rise. Since it takes time to train and become a math teacher, the supply will be inelastic. Price will be high because of the elasticity of supply and high demand.
EVAL:
- high wages incentivises people to become teachers and this might reduces wages in the long run.
- Time lag.
What are the 3 other factors that influence the elasticity of supply of labour?
- Length of training.
- Qualifications and skills needed.
- Mobility of labour.
