Theme 3, 3.5 Global Labour markets

Question 1

Define Primary sector

Answer 1

Includes any industry involved in the extraction and collection of natural resources: such as farming, forestry, mining and fishing.

Question 2

Define Secondary sector

Answer 2

Manufacturing and Industry sector known as the secondary sector, sometimes as the production sector, includes all branches of human activities that transform raw materials into products or goods.

Question 3

Define Tertiary Sector

Answer 3

Provides services to the other sectors of the economy.Banks, supermarkets, cinemas

Question 4

Define Human capital

Answer 4

Refers to the skills, experience and knowledge acquired by individuals. Human capital is created through education, on-the-job training, apprenticeships, vocational courses and relevant experience.

Question 5

Define Structural change

Answer 5

Involves reallocation of resources. Less is produced of goods and services that face falling demand: output of those for which demand is increasing rises. Technological change, and international competition, play a part in this.

Question 6

Define Labour intensive production.

Answer 6

This type of production uses large amounts of labour and relatively little capital. Many services are labour intensive, e.g. hairdressing.

Question 7

Define Capital intensive production

Answer 7

This type of production uses large amounts of capital equipment and relatively little labour. Productivity will usually be high.

Question 7

Define Geographical mobility

Answer 7

Refers to the ability of workers to move from one area to another.

Question 8

Define Occupational mobility

Answer 8

The ability of workers to move from one type of work to another.

Question 9

Define Birth rates

Answer 9

Measure the average number of live births per year, per thousand of population.

Question 10

Define Mortality rates

Answer 10

Measure the number of deaths per year, per thousands.

Question 11

OECD

Answer 11

These are mainly developed countries, with some emerging economies. It aims to promote economic and social development around the world. Organisation for Economic Co-operation and Development.

Question 12

Define underemployment

Answer 12

Occurs when people work but do not have enough opportunities to work-full-time

Question 12

Define The Knowledge economy

Answer 12

As its heart is a combination of knowledge, skills and innovative technology, driving economic activity and creating a competitive advantage. The quaternary sector plays a major part in it.

Question 13

Define Derived Demand

Answer 13

Refers to the employers’ demand for labour, because they do not want labour for its own sake but for what it might be able to produce. The demand is derived from demand for the final product.

Question 14

Define Voluntary unemployment

Answer 14

means choosing not work. This can be short run if frictionally unemployed take a break before seeing work. Disaffected workers could be long term voluntary unemployed. Free market economists argue that cutting benefits ( raising wages) will make voluntary unemployment less attractive. Most unemployment is not voluntary.

Question 15

Define Monopsony Power

Answer 15

Occurs where there is a single buyer, just as a single seller has a monopoly.

Question 16

Define Countervailing Power

Answer 16

Is the idea that imperfections in markets can produce better outcomes where there is both monopoly power and monopsony power. Reducing the power of one side could make such markets operate less well.

Question 17

How has globalisation contributed to the increase in the size of the labour force?

Answer 17

With ease of travel and less restrictions between borders, people have been able to find jobs more easily.

Question 18

Why has production shifted from developed to developing countries?

Answer 18

Companies can take advantage of the low labour costs in developing countries.

Question 19

Why might unemployment in developed countries increase as a result of globalisation?

Answer 19

Firms shift their operations to countries with low labour costs, leaving those in developed countries with no scope for employment.

Question 20

List 4 factors affecting the demand for labour.

Answer 20

1. Wage rate
2. Demand for products
3. Productivity of labour
4. Substitutes for labour.

Question 21

Why do firms employ less workers as wage rises?

Answer 21

It may be easier for firms to invest in capital, which is cheaper and more productive than manual labour, so less workers are required.

Question 22

If workers are more productive, will their wages be high or low?

Answer 22

Their wages will be high.

Question 23

If the market is unsaturated, how will this affect wages, and why?

Answer 23

The firm is the only one in that market, and so has more bargaining power than workers, and will therefore offer lower wages .

Question 24

How is the supply of labour calculated?

Answer 24

By multiplying the number of people who can work at the current wage rate by the number of hours the can work.

Question 25

Describe the relationship between the wage rate and the number of workers willing to work

Answer 25

As the wage rate increases, the number of people willing to work increases (proportional).

Question 26

Why do firms fear trade unions?

Answer 26

Trade unions have the power to increase wages and working conditions, thus raising costs for firms.

Question 27

If taxes are too high, how will this affect the supply of labour?

Answer 27

This will reduce the supply of labour, because less people are willing to work knowing that more of their income is deducted with taxes.

Question 28

What happens if trade unions push wages too high?

Answer 28

It will cost too much for to maintain their employment level, so they will cut down on the number of workers required.

Question 29

Describe the difference between individual and collective bargaining

Answer 29

Individual bargaining is between an employer and an employee, whereas collective bargaining is between employers and a group of employees.

Question 30

What is productivity bargaining?

Answer 30

Occurs when employers and employees meet to discuss wage rises given an increase in productivity.

Question 31

Do minimum wages have to be set above or below the free market price?

Answer 31

Above the market price, else they will prove ineffective.

Question 32

How will a minimum wage effect the demand for labour?

Answer 32

It will reduce the demand for labour.

Question 33

If the demand for labour is inelastic, how will a minimum wage affect the demand level

Answer 33

There will be a smaller contraction in demand than there will an increase in the supply of labour with a minimum wage.

Question 34

How would a minimum wage benefit tax revenues?

Answer 34

It will increase tax revenues, because consumers will be earning higher wages and will therefore have to pay higher income tax.

Question 35

How would a minimum wage affect competitiveness?

Answer 35

Countries would become less attractive to foreign firms as higher wages would mean higher costs for those firms.

Question 36

What is international competitiveness

Answer 36

This is when firms can successfully compete overseas whilst sustaining improvements in real output and living standards.