3.5 Labour markets Flashcards
Define derived demand
Derived demand means that the demand for labour is dependent on
demand for the final good and services that the workers produce.
Define marginal physical product of labour
the additional quantity of output produced by an additional unit of labour
define the marginal revenue product of labour
= the additional revenue received by a firm as it increases output by using an additional unit of labour
Formula for MRP of labour
MPP x MR
Name 4 factors affecting demand for labour
Cost of capital
Demand for end product
Improvements in labour productivity
Proportion of labour cost to total cost
Name 4 factors affecting elasticity of demand for labour
Time
Availability of substitutes
Percentage of income spent
Elasticity of demand for final product
What is the substitution effect in labour markets
People will substitute work for leisure depending on the reward for working
What is the income-leisure effect in labour markets
As wages increase, people demand more leisure time as leisure is a normal good
Name 3 factors causing a shift in the individual supply of labour
Non-monetary benefits e.g canteen
Job satisfaction
Promotion
Name 5 factors affecting industry supply of labour
Benefit payment
Immigration
Participation rate
Qualifications needed
Career progression
Define geographic immobility
When workers cannot or will not move from areas of high unemployment to areas where there are jobs
Name 4 causes of geographic immobility
- Family ties and children’s education
- Cost of moving
- Housing issues such as house price differentials, and availability of council houses
- Lack of information about job market/vacancies available
Define occupational immobility
When a worker in one industry which is suffering from structural unemployment, cannot move to another industry easily
Name 4 causes of occupational immobility
- Retraining required
- Lack of information on what skills are needed for the jobs available
- Inherent abilities of the structurally unemployed resources may not match the jobs available
- Lack of desire to retrain/fear of change
Name a factor affecting price elasticity of supply of labour
Level of skill needed
