Micro 48 Immobility

Question 1

What 4 features does a fully flexible labour market have?

Answer 1

1. Change the number if workers quickly.
2. Change the number of hours people work.
3. Change the tasts of workers.
4. Change peoples wages without much notice or barriers.

Question 2

What is geographic immobility and why does it cause labour market failure?

Answer 2

When workers cant move between regions/cities/countries. This creates long term unemployment and leads to disparities in wages across places.

Question 3

What is occupational immobility and why does it cause labour market failure?

Answer 3

When workers can’t change jobs due to lack of skills and qualificaitons. Causes structural unemployment.

Question 4

How can technology reduce market failure associated with unemployment?

Answer 4

• Lowers barriers - lots of information and applying online.
• Work from home - tackles geographical immobility.
• Creates jobs - streaming/dropshipping.
  *Improves productivity.;

Question 5

Define disequilibrium unemployment?

Answer 5

When aggregate supply of labour exceeds the aggregate demand for labour.

Question 6

What is the best ways to show disequlibrium unemployment (cyclical unemployment basically)

Answer 6

AD shifting left on AD/AS diagram.
Minimum wage diagram.

Question 7

What is the obvious solution to the disequillibrium unemployment?

Answer 7

Drop wages.

Question 8

Why is reducing wages not possible?

Answer 8

People are not willing to take the wage cut - sticky wages

Question 9

What 6 factors suggest the UKs labour market is becoming more flexible?

Answer 9

1. Rise in zero hour contracts.
2. Migration and globalisation - larger supply of labour.
3. Harder to get benefits now than before.
4. Brexit - lower employee protection after brexit.
5. Trade union power is falling - banned closed shops.
6. Remote working.