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Economics > Theme 3: Labour markets > Flashcards

Theme 3: Labour markets Flashcards

1
Q

Factors that effect the demand for labour

A
  • Wage rate
  • Demand for products
  • Productivity of labour
  • Substitutes for labour
  • How profitable the firm is
  • Number of firms in the market
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2
Q

Factors that effect the supply of labour

A
  • Wage rate
  • Demographics of the population
  • Migration
  • Advantages of work
  • Leisure time
  • Trade unions
  • Taxes and benefits
  • Training
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3
Q

Geographical immobility

A

The obstacles which prevent the FOP moving between areas.

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4
Q

Occupational mobility

A

The obstacles which prevent the factors of production changing their use eg collapse of the mining industry

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5
Q

What is Keynes’ theory of ‘sticky wages’?

A

Rather than lowering the wage of several workers during a recession, a few workers might be sacked instead.

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6
Q

What causes wage differentials for the same job?

A
  • Formal education
  • Skills, qualification and training
  • Pay gaps
  • Wages and skills
  • Gender
  • Discrimination
    *
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7
Q

What is the impact on the labour market of migration?

A

More competition to get a job and might bring high quality skills to the domestic workforce and so effect the wages of the lowest paid in the domestic workforce.

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8
Q

What is the aim for unemployment rate?

A

3%

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9
Q

What are issues with an increasing unemployment rate?

A
  • Less disposable income and their standard of living might fall as a result.
  • Psychological consequence of losing their job.
  • government have to pay more on benefits, opportunity cost.
  • Less revenue from income tax
  • Youth unemployment, hysteresis, when someone is out of work for so long they’re no longer employable.
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10
Q

Draw a national minimum wage diagram

A
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11
Q

What are the positive impacts of a national minimum wage?

A
  1. Increase standard of living of the poorest and provide an incentive for people to work.
  2. More tax revenue, due to more people earning higher wages.
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12
Q

What are the possible consequences of an increase in NMW

A
  1. Make it harder for young people to find a job.
  2. may make a country less competitive on a global scale.
  3. rise in unemployment
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13
Q

What is a maximum wages purpose?

A
  1. Limits how much income a person can earn. It can be used as a means to redistribute wealth more equitably in society.
  2. It should limit inflation
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14
Q

What are the possible downsides of a maximum wage?

A

Could be a disincentive to innovate and workers might opt for less demanding work.

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15
Q

Benefits of public sector wage setting

A
  • Public sector pay is more equal than private sector pay
  • and has grown more than private sector
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16
Q

Policies to tackle labour market immobility

A
  1. Trade union power
  2. Regulation
  3. Welfare payments and income tax rates
  4. Training
  5. Infrastructure
  6. Housing
17
Q

How does trade union power tackle labour market immobility

A

Trade unions increase job security and push for higher wages

18
Q

How do regulations tackle labour market immobility

A

More freedom to hire and fire workers and the more freedom workers have in terms of rights, the more flexible the labour market is.

19
Q

How do welfare payments and income tax rates tackle labour market immobility

A

The reward for working should be high. If welfare payments are generous and income tax rates are high, labour market flexibility is likely to be lower.

20
Q

How does training tackle labour market immobility

A

More widely available and more skilled workforce makes the labour market more flexible.

21
Q

How does infrastructure tackle labour market immobility

A

Improving infrastructure might help the geographical immobility of labour, since it becomes easier to move around the country.

22
Q

How does improvements in housing tackle labour market immobility

A

If housing becomes more affordable then people can move around the country more freely reducing geographical mobility.

23
Q

What is the elasticity of demand impacted by?

A
  1. How much labour costs as a proportion of total costs
  2. The easier substitutes are
  3. The PED of the product
24
Q

What is price elasticity of supply of labour effected by?

A
  1. The skills of the workforce. Skilled jobs have lower elasticities than unskilled jobs because its more difficult to attract workers,
  2. Length of training
  3. Sense of vocation, rewards that are not financial eg teaching
  4. Time period

Economics (22 decks)

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