The Labour Market Flashcards
What is a labour market?
A place where supply of and demand for labour meet
What is labour supply?
The number of hours people are willing and able to supply at a given wage rate
What is labour demand?
The number of hours of labour firms are willing and able to hire at a given wage rate
What is a wage rate?
The price of an hour of labour
What does supply of labour depend on?
Level of wage and unemployment benefits, training period, appeal of a job, labour force, trade unions and the time period
Is labour supply upward or downward sloping?
Upward sloping
What does labour demand depend on?
Wages, machinery, capital stock, technology, working practice and training and skills
Is labour demand upward or downward sloping?
Downward sloping
What does a change in the wage rate cause?
It causes a movement along the labour demand curve and a movement along the labour supply curve
What does a right shift of labour demand cause?
It causes an increase in the wage rate and a higher quantity of labour
What does a leftward shift in the labour demand cause?
It causes a fall in the wage rate and a lower quantity of labour
What does a rightward shift of labour supply cause?
It causes a fall in the wage rate and a higher quantity of labour
What does a leftward shift of labour supply cause?
It causes an increase in the wage rate and a lower quantity of labour
What are the reasons for wage differentials?
Limited movement between industries, difference in jobs in terms of working conditions and job satisfaction and ignorance of wage rates elsewhere
How does the government influence the labour market?
By being an employer themselves, creating laws to protect employee and employer, unemployment benefits and setting a minimum wage
