Topic 4: Labour market outcomes

Question 1

What are wage outcomes

Answer 1

a labour market outcome that is dependent on income groups, occupational groups, age, gender and cultural background.

Question 2

What is nominal wage?

Answer 2

the pay received by employees, not adjusted for inflation

Question 3

What is real wage?

Answer 3

a measure of the actual earnings of an employee adjusted for the effects of inflation

Question 4

What are labour costs?

Answer 4

the P firms and employers have to pay to hire employees (including wage and not wage)

Question 5

What impacts the price of real labour costs?

Answer 5

If the growth in real wages is higher than the growth in productivity, than real labour costs will rise, eating into the employer’s profits

If the growth in real wages is lower than the sum of inflation and productivity, than real labour costs will fall, expanding the employer’s profits

Question 6

What will firms do when labour costs are rising but they want to keep their profit margins?

Answer 6

They may choose to employ less labour if the cost of the substitute, capital resources, is cheaper than labour costs.

Question 7

What is a micro-market?

Answer 7

a market for each type of occupation and even for each individual enterprise

Question 8

What are wage differentials between different occupations

Answer 8

When occupations that dont compete with each other have differences in wage because of the different skill requirements, training periods and working conditions

Question 9

How does having more experience affect your wage?

Answer 9

individuals are considered to be more valuable and are generally paid more

Question 10

How does geographic mobility impact wage rates?

Answer 10

Firms may offer higher wages to occupations located in more isolated areas compared to less isolated areas. Therefore, there are high chances for a similarly qualified person to be offered higher wages if they were willing to work in an occupation with lower geographic mobility.

Question 11

How does the productivity of labour impact wages?

Answer 11

an increase in labour productivity leads to higher wages for employees

Question 12

What is labour productivity?

Answer 12

refers to Q of output produced per unit of labour per unit of time

Question 13

How does the capacity of the firm impact wages?

Answer 13

If firms have a larger and more profitable capacity, they are able to pay their employees higher wages. Firms usually have a larger capacity if there is less competition in product markets.

Question 14

What is the pattern of wage received as you age?

Answer 14

lower wage –> higher wage –> lower wage

Question 15

How does gender impact wage levels?

Answer 15

Discrimination by employers causes certain groups in our society to have an unfair disadvantage when it comes to their wages. Women and indigenous Australians are usually subjected to this discrimination

Question 16

What is a glass ceiling in terms of earnings?

Answer 16

an invisible barrier that makes it harder for women to gain access to the top paying positions

Question 17

reasons for why women get paid less than men in the same occupation:

Answer 17

• discrimination
• interruptions in working life (usually caring for children)
• working in lower-paying industries with high rates of women employment

Question 18

define enterprise bargaining

Answer 18

refers to negotiations between employers and employees (or their reps) about the pay and wok conditions of the individual firm

Question 19

define income distribution

Answer 19

the way in which an economy’s income is spread among the members of different social and socioeconomic groups

Question 20

how has the distribution of income changed in Aust over time?

Answer 20

inequality in the dist’n of income has slightly grown over the past decade

Question 21

what is the impact of enterprise bargaining on the distribution of income?

Answer 21

great differences in income (inequality)

Question 22

define non-wage outcomes

Answer 22

the benefits that many employees receive in addition to their ordinary and OT payments

Question 23

examples of non-wage outcomes:

Answer 23

• sick leave
• superannuation
• company car
• study leave
• working from home

Question 24

define superannuation

Answer 24

a form of saving that individuals cannot access until they reach retirement age (65)

Question 25

what are the types of non-wage outcomes?

Answer 25

• salary packaging: being supplemented with other benefits
• bonus cash payments on top of normal pay: performance bonus
• flexibility for employee work patterns: being able to adjust the way they work due to personal reasons

Question 26

What are the economic benefits of inequality?

Answer 26

• encourages the labour force to increase levels of skill and education
• encourages the labour force to work longer and harder
• makes the labour force more mobile
• encourages entrepreneurs to accept risks more readily
• creates the potential for higher savings and capital formation

Question 27

What are the economic costs of inequality?

Answer 27

• reduces overall utility/satisfaction
• can reduce economic growth
• reduces consumption and investment
• increases consumption of expensive G&S
• creates poverty and social problems
• increases cost of welfare support

Question 28

What are the social benefits of inequality?

Answer 28

get rewarded for effort (given that opportunity circumstances are equal, which they aren’t)

Question 29

What are the social costs in inequality?

Answer 29

• lowers some individuals’ wellbeing
• creates social class divisions
• poverty

Question 30

define unemployment

Answer 30

a situation where individuals want to work but cannot find a job (labour resources are not fully utilised, leading to market failure)

Question 31

how do you calculate the unemployment rate?

Answer 31

no. of persons employed/labour force X 100

Question 32

what are the types of unemployment?

Answer 32

• cyclical unemployment
• structural unemployment
• long-term unemployment
• seasonal unemployment
• frictional unemployment
• hard-core unemployment
• hidden unemployment
• underemployment

Question 33

what is cyclical unemployment?

Answer 33

when a downturn in the business cycle causes an increase in unemployment since the D for labour is a derived D.
when there is a downturn in cycle, the D for G&S falls and firms need to cut off on some labour to protect the profit margins

Question 34

what is structural unemployment?

Answer 34

when the skills of an employee doesnt match the skills needed by the employer. The restructuring of an economy can cause people to fall behind in skill development, making it harder for the structurally unemployed to find a new job.

Question 35

what is long-term unemployment?

Answer 35

unemployed for a year or more. After not being employed for 12 months or more, they may lack skill or employers will be reluctant to hire someone who hasnt been working for a while.

Question 36

what is seasonal unemployment?

Answer 36

occurs when some jobs are only at peak during specific seasons (periods of time)
seasonal unemployment also rises during the December-March period due to all the people who left/graduated from school are looking for jobs

Question 37

what is frictional unemployment?

Answer 37

the period in time where an individual is transferring from one job to another.

Question 38

what is hard-core unemployment?

Answer 38

individuals who are not suitable for work due to personal reasons

Question 39

what is hidden unemployment?

Answer 39

individuals who are not counted in the official unemployment figures because they have given up searching for a job or have gone back to school
(contributes to a fall in labour participation rate but not an increase in unemployment rates)

Question 40

what is underemployment?

Answer 40

work part-time or casual jobs but wish to work more hours per week

Question 41

define structural change

Answer 41

the process by which the pattern of prod’n is altered over time, and certain products, processes or prod’n, and the possibility of an industry’s disappearance and the appearance of new firms.

Question 42

is unemployment higher in regional or greater sydney?

Answer 42

regional sydney

Question 43

define ‘casualisation of work’

Answer 43

the growth of casual employment (and relative decline of full-time permanent jobs) as a proportion of the total workforce

Question 44

define ‘part-time employed’

Answer 44

regularly working less than 35 hours per week

Question 45

benefits of working casual or part-time hours

Answer 45

• more flexible for employers to change staffing levels as business D change
• employers may avoid paying some non-wage costs
• flexibility for employees with other commitments

Question 46

costs of working casual or part-time hours

Answer 46

• no guaranteed set amount of hours (less job security)
• difficult for employees to plan for the future
• less staff loyalty
• less skill development of workforce skills

Question 47

what are contractors?

Answer 47

get paid to provide a specific service for a business
arrangements with contractors are governed by commercial law instead of employment law

Question 48

what is outsourcing?

Answer 48

(sub-contracting or contracting out) occurs when an organisation pays another business to perform a function that it does not regards as a core part of its business focus
(increases efficiency)