Pack 5: Labour Markets Flashcards

1
Q

What is derived demand?

A

Goods demanded only because they are needed for production of other goods

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2
Q

What causes shifts in labour demand?

A

~Demand for final product
~Productivity
~Change in price of capital
~Tech development

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3
Q

What is the wage elasticity of demand for labour?

A

The responsiveness of quantity demanded of labour to change in wage

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4
Q

What causes shifts in the labour supply?

A

~Size of the working population
~Skill and qualifications required
~Wages in substitute occupations
~Non-monetary characteristics

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5
Q

What is wage elasticity of supply for labour?

A

Responsiveness of quantity of labour supplied to a change in wage

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6
Q

What can competitive labour market diagrams also be used to show?

A

Wage differentials

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7
Q

What are the key topical issues with wage differentials?

A

~Differences between occupations, e.g. Banker and footballer pay
~Differences between genders, e.g. male-female pay gap

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8
Q

What are the key factors in determining wages in non-competitive markets?

A

~Monopsony power
~Trade unions

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9
Q

What is monopsony power?

A

Single or few dominant buyers, in this case firms for employing workers, wages could be driven below equilibrium

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10
Q

What is the role of trade unions?

A

~Can negotiate wages above market equilibrium through strike action, however labour demand will contract increasing unemployment
~If wages already below equilibrium they can increase wages and employment using counter-veiling power

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11
Q

What is labour immobility?

A

Inability of workers to take available work, either geographically or occupationally

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12
Q

What is geographic immobility?

A

Inability of workers to take available work in different areas/regions

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13
Q

What is occupational immobility?

A

Inability of labour to change occupations to take available work

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14
Q
A
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