Theme 3: Labour Market Shifts

Question 1

How might change in derived demand cause a labour market shift?

Answer 1

Demand for a FOP eg demand for labour derived from the demand for a good or service.

Question 2

How might change in productivity cause demand for labour to increase?

Answer 2

Increase productivity which leads to eg more wood being chopped which makes them more profit.

Question 3

How might change in productivity cause a decrease in the demand for labour?

Answer 3

Productivity might increase which would produce more wood so therefore need fewer workers.

Question 4

How might change in cost of capital as substitutes cause a labour market shift?

Answer 4

Capitals eg machines get cheaper and demand for labour decreases

Question 5

How might change in education and training cause a labour market shift?

Answer 5

Workers make become more productive which could produce a decrease or an increase in demand.

Question 6

How might change in migration cause a labour market shift?

Answer 6

Increase in labour supply in in country

Decrease in labour supply in out country

Question 7

How might an increase in benefits cause a labour market shift?

Answer 7

Increase in benefits so they may choose to quit or stay unemployed which would decrease labour supply.

Question 8

How might increase in income tax cause a labour market shift?

Answer 8

Increase income tax may lead to a decrease in labour as may not be worth working for.
Income in income tax may also lead to increase supply as they work more hours to pay for mortgage etc.

Question 9

What are non-pecuniary benefits?

Answer 9

Non monetary benefits eg Job satisfaction, making a change or free gym

Question 10

What might an increase in non-pecuniary benefits have an effect on the supply of labour?

Answer 10

Supply will increase