3.5 - Labour Markets

Question 1

What is derived demand?

Answer 1

When demand for a good that results in demand for a factor of production
(e.g. demand for coffee leads to demand for baristas)

Question 2

What are the 6 factors influencing demand for labour?

Answer 2

• Demand for the product (derived)
• Regulation
• Technology
• Wages in other countries
• Wage rates
• prices of other factors of production
  (DR TWWP)

Question 3

What is price elasticity of demand for labour?

Answer 3

Responsiveness of the quantity of labour demanded to the wage rate

Question 4

What are the 4 factors affecting PED of labour?

Answer 4

• Direct correlation to price elasticity of demand for the product
• Proportion of wages to the total cost of production
• Substitutes
• Time

Question 5

What are the 7 factors influencing supply of labour?

Answer 5

• Wages
• Population and distribution of age
• Non-monetary benefits
• Education/ training
• Trade unions and barriers to entry
• Wages and conditions of other jobs
• Legislation

Question 6

What is occupational immobility?

Answer 6

Workers find it hard to move to another job due to lack of transferable skills

Question 7

What is geographical immobility?

Answer 7

Workers find it hard to move between regions due to costs, family etc…

Question 8

What is elasticity of supply for labour?

Answer 8

Responsiveness of supply of labour to change in wage rates

Question 9

What is a bilateral monopoly?

Answer 9

When there is both a monopoly and monopsony in the labour market

Question 10

What are the 7 issues in a labour market?

Answer 10

• Skill shortages
• Young Workers
• Retirement
• Wage inequality
• Zero-hour Contracts
• The ‘gig economy’
• Migration

Question 11

What is national minimum wage?

Answer 11

Minimum hourly rate of pay and employer can pay its workers

Question 12

What are the 5 ways the government can improve geographical mobility of labour?

Answer 12

• Increase Supply of houses
• Improve transport links
• National Advertising
• Introduce subsidies (e.g. for houses in areas of labour shortages)
• Move public Agencies out of London

Question 13

What are 4 ways the government can improve occupational mobility of labour?

Answer 13

• Increase vocational training
• Encourage further study (e.g. university)
• Encourage greater spending on training within work
• Helping improve interview skills