Topic 5 Flashcards
What is derived demand of labour?
The demand for labour comes from the demand for the good being produced
What is nominal wages?
The monetary value of wages
What are real wages?
The wage adjusted for inflation
What factors affect the demand for labour?
- The wage rate
- The demand for products
- Productivity
- substitutes for labour
- number of firms in market
- how profitable the firm is
What is the unit labour cost?
How much labour costs per unit of output
What is productivity?
The output per worker per period of time
What is the Marginal Revenue Productivity?
The change in output caused by an additional resource
What factors affect the wage elasticity of demand for labour?
- PED if the product
- The skill of labour
What is the supply of labour?
The number of workers in oolong and able to work at the current wage rate multiplied by the number of hours they are willing to work
What factors influence the supply of labour?
- wage rate
- demographic of population
- migration
- advantages/costs of work
- leisure time
- Trade unions
- taxes/benefits
- training
What factors influence the WES of labour?
- Skill of the job
- Length of training required
What are transfer earnings?
The minimum reward required to keep labour in their current occupation
What is economic rent?
Income that is above transfer earnings
What are wage differentials?
When workers are paid different amounts for the same job
What are the causes of wage differentials?
- formal education
- skills/qualifications/training
- gender
What is a monopsony?
When there is only one buyer of labour
What do trade unions do?
- aim for wages above equilibrium
- increase job security
What is imperfect information in the labour market?
Some qualified workers may not be aware of higher paying jobs or some people may not see the long term benefits of education
What is a bilateral monopoly?
One buyer and one supplier
What is the geographical mobility of labour?
The ability of labour to move between different areas
What is the occupational mobility of labour?
The ability of labour to move between jobs
