The Labour Market Flashcards
What is the participation rate?
Employed people divided by the population x 100
What can participation rate be affected by?
- unofficial working
- percentage of working women
- how long education is
- expats
What is the theory of marginal productivity of labour?
States that the demand for workers depends on their marginal revenue product
What is MRP?
The value of the physical addition to output arising from hiring one extra unit of labour
What does marginal productivity theory assume?
- workers are homogenous
- firms have no buying power
- trade unions have no impact on the available labour supply
- the physical productivity of each worker can be accurately and objectively measured and the market value of the output by the labour force can be calculated
- the industry supply of labour is assumed to be perfectly elastic, workers are occupationally and geographically mobile and can be hired at a constant rate
Determinants of individual firms demand for labour?
- price of good
- productivity
- price of other factors of production/ price of subs to labour
- supplementary labour costs
- profitability of the buyer
What’s the price elasticity of demand for labour equation?
%/\ Quantity demanded of labour / %/\ wages
Determinants of the elasticity of demand for labour?
- time
- substitutes
- elasticity of demand for the product
- proportion of labour cost to total cost
evaluations of MRP theory of labour demand?
- workers aren’t homogeneous
- difficult to measure MRP (productivity)
- team working - how do you measure each person separately? specialisation?
- pay scales (not paid by productivity but by experience) (public sector firms)
- workers aren’t fully mobile
what are the factors affecting the supply of labour to different jobs?
- non monetary characteristics of a job (fringe benefits)
- wages on offer in substitute jobs
- barriers to entry (qualifications)
- improvements in occupational mobility of labour
- net migration of labour
- demographic factors
- peoples preferences (flexibility in the job)
what does elasticity of labour supply depend on?
- skills and qualifications
- length of the training period
- sense of vocation
- time period
what are reasons for the gender pay gap?
- human capital (difference in education levels between M&F)
- part time workers
- travel patterns
- occupational segregation
what are some reasons why the MRP of men and women differ?
- time in education
- disproportionately in part time work
- women working in lower productivity sectors are more easily replaceable in the short run
- time out of work - maternity leave
why do wage rates differ?
- experience
- qualifications
- part time
- gender
- sex
- age
- training
- ethnicity
- region
- trade unions
