Supply Of Labour Flashcards
Definition
Number of hours worker over a period of time
Average hours worked and average wage rate
In uk it is 37 hours a week
£15.15
Supply curve what (3+)
Backwards bending
An increase in the wage will encourage workers to work more hours as they value the money earned from work more than leisure time lost
However some increase in wages cause workers to want to reduce their working week or increase holidays as they will value leisure time more than the extra money to spend
What is negative income effect (3)
As wage increases we work more but at a certain level the target income is achieved so hours worked reduces
Higher wages encourage us to work less
Work is an inferior good so the more income we are given, the less we demand
What is the positive substitution effect (2)
Higher wages encourage us to work more
Opp cost of leisure time increases when paid more
Income + substation effects (3)
Low levels of income = positive substitution effect outweighs the negative income effect of a wage rise = rise in pay = increase in the number of hours worked
Higher levels of income the positive substitution effect is likely to be equally matched by the negative income effect = Wage increases neither an incentive or a disincentive effect on working hours
Very high levels of income = the positive substitution effect of a wage increase is more than offset by the negative income effect and so workers choose fewer hours
Non monetary factors that effect supply (4)
Job satisfaction = workers will accept a lower wage if there is job satisfaction
Location = jobs are more attractive if it is in a better location for the worker
Friends and family
Commuting
Supply of labour for a firm shape
Supply of labour curve = horizontal as they can hire any worker for the same wage
Shift in labour (4)
Training period
Working conditions = appeal
Time period
Job satisfaction
