T3 LABOUR MARKETS Flashcards

1
Q

What are the three main factors that affect elasticity of labour demand?

A

Substitutes

% of Total Cost

Time

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2
Q

How do substitutes affect the elasticity of labour demand?

A

If workers are easy to substitute/replace, demand will be elastic.

If workers are hard to substitute/replace, demand will be inelastic.

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3
Q

How does % of total cost affect the elasticity of labour demand?

A

If wages make up a small % of total cost, any increase in wage will have a small impact, so demand for labour will be unresponsive and therefore inelastic.

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4
Q

How does time affect the elasticity of labour demand?

A

In the short run, without enough time to search for substitutes, firms won’t be able to respond much so demand for labour will be inelastic.

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5
Q

If demand is inelastic, how does that affect wages

A

If demand is inelastic, we’ll see higher wages.

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6
Q

What are the three main factors that affect elasticity of labour supply?

A

Skills & Qualifications

Unemployment

Time

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7
Q

What is derived demand

A

demand for a factor of production (like labour) that is derived from the demand of another good/service.

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8
Q

What are non-pecuniary benefits

A

are all the benefits of a job other than the wage you’re paid to do it.

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9
Q

What are some example non-pecuniary benefits

A

Job satisfaction, company holidays/parties, company car

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10
Q

How can the nhs offer such low wages to doctors

A

NHS owns 90% of the UK healthcare industry, making them a monopsony.

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10
Q

What is a monopsony

A

When there is only one buyer in a market

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11
Q

Explain how a monopsony can reduce the wages it pays its workers. (3)

A

A monopsony is when there’s only one buyer in the market

A monopsony can reduce the wages it pays its workers and the workers will have no choice but to accept, because they have nowhere else to work.

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12
Q

What is the national minimum wage

A

The lowest wage employers can legally hire a worker for.

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13
Q

What does a national minimum wage placed above equilibrium lead to

A

Excess supply/unemployment

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14
Q

What are the two results of implementing a national minimum wage

A

Higher wages for employees but decreased employment

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15
Q

What are trade unions

A

A trade union is a group of workers who collectively bargain to improve employee welfare.

16
Q

What is a maximum wage

A

The highest wage employers can hire a worker for

17
Q

What does a maximum wage set below equilibrium wage lead to

A

Excess demand / shortage

18
Q

What are the two results of a maximum wage

A

Lower wages for employees and labour shortages

18
Q

What does occupational immobility of labour often lead to:

A

Structural unemployment

19
Q

what are 3 ways the government can intervene to improve occupational mobility

A

Education

training

apprenticeships schemes

19
Q

What is occupational immobility

A

Occupational immobility is when workers can’t move between different jobs because they lack the skills needed.

20
Q

What is geographical immobility

A

Geographical immobility is when workers struggle to move between different areas.

21
Q

What are the causes of labour market failure

A

Occupational immobility

Geographical immobility

22
Q

How can the government intervene to fix geographical immobility

A

Improving transport

Relocation subsidies