Supply for Labour (3.5.2) Flashcards
What does the supply of labour curve show?
The ability and willingness of people to make themselves available to work at different wage rates
What factors influence the supply of labour?
-Training periods if long act as barrier to entry
-Wages in other occupations can be higher
-Changes in migration policy can increase net migration rate
-Income tax levels can decrease supply of labour
-Working conditions
-Trade union power
-Level of welfare benefits
-Social trends such as working from home during covid can change the labour market significantly
-population and distribution of age
-legislation like retirement and school leaving age
What is market failure?
Occurs when there is a less than optimal allocation of resources from society’s point of view
When does market failure occur in the labour market?
When workers are unable to easily move between jobs
What are the two different types of market failure in the labour market?
- Geographical immobility of labour
- Occupational Mobility of labour
What is Geographical immobility of Labour?
Occurs when workers find it difficult to move from one geographical area to another in order to secure employment. This could be because of family ties, lack of info about new place and challenges in securing/affording accomodation
What is Occupational Mobility of Labour?
The ability of a worker to change occupations when they lose a job. If their skill base is transferable between different occupation then their occupational mobility is high. If they cant easily transfer their skills between occupations this leads to structural unemployment
What is structural unemployment?
Unemployment caused by a mismatch between jobs and skills as the structure of an economy changes
What is elasticity of supply?
The responsiveness of supply to a change in wage rates
