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Economics > Labour Markets > Flashcards

Labour Markets Flashcards

1
Q

Labour demand is more elastic when…

A

Labour is a high percentage of cost, the cost and ease of substitution is between labour and capital is low, the demand for the final product is elastic, in the long run.

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2
Q

Labour supply is elastic when…

A

There are low skills requirements, there are low training costs, the job has little vía tío al factor

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3
Q

What is the minimum wage?

A

£11.44 per hour

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4
Q

Why are there differences in wages?

A

Labour is not homogenous, there is not perfect information concerning jobs, labour can be immobile (geographically and occupationally) firms do not always want to maximise wages and workers do not always want to maximise

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5
Q

Globally how much less do women earn than men?

A

16%

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6
Q

What is the marginal revenue product of labour?

A

Extra revenue generated when an additional worker is employed

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7
Q

Labour elasticity in demand… if labour is a high percentage of total costs then labour is more…

A

elastic

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8
Q

Demand for labour is more elastic when it is …. to substitute between labour and capital

A

easier

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9
Q

More elastic labour demand leads to a /// fall in employment

A

greater

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10
Q

What is making labour demand more elastic in key industries where the introduction of a minimum wage may take effect (supermarkets)?

A

Technology (substitution effect). Hence the minimum wage may result in more unemployment.

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11
Q

Why is the labour supply curve upward sloping?

A

substitution effect with free time, income effect

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12
Q

What happened to trade union density 1995 to 2017?

A

Fell from 32% to just over 20%

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13
Q

What does new unionism focus on?

A

Less concern with wages, more concern with protecting employment, pension rights ect

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14
Q

Trade unions are better placed to negotiate higher wages when…

A

wage elasticity of demand for labour is low

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15
Q

What trade unions do in the context of monopsony markets?

A

Improve wages and employment, bring it closer to a competitive market outcome.

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16
Q

What is efficiency wage theory?

A

Higher pay leads to higher productivity hence there is an outward shift in labour demand, greater employment.

17
Q

What is labour market flexibility?

A

Speed and ability of a labour market to respond to a change in a economy

18
Q

Where is the UK ranked in labour market flexibility?

A

8th in the world

19
Q

What demographics can flexible labour markets be beneficial for?

A

female labour market participation and employment rate amongst younger workers

20
Q

What impact do more flexible labour markets have on the Phillip curve?

A

Flatten the relationship between inflation and unemployment

21
Q

What are two macro benefits of improved labour market flexibility?

A

1) Unemployemnt reduction - improved phillips curve trade off.
2) More attractive to FDI (especially post brexit)

22
Q

What are the three factors that make labour demand more elastic?

A

Labour as a high percentage of costs, easy and inexpensive to substitute between labour and costs, PED for the final output

23
Q

What is the key industry to talk about when discussing costs of high immigration?

A

The housing market - higher demand (be uses supply is so inelastic)

24
Q

What are the different types of wage differentials?

A

Compensating wage differentials- a reward for risk taking in poor conditions
Reward for human capital - differentials compensate workers for human capital aquisitioj

25
Q

What was trade union density?

A

22.3%

26
Q

What are labour market failures?

A

Labour Immobility, Disincentives to find work ( disincentives to earn extra income), discrimination, monopsony power of employers

27
Q

Key industry where wage differential exists because of differences in demand…

A

Football because of discrimination (perceived MRP is lower for women lower labour demand). Premier league - excess of 2,800,000 Women’s Super league 47,000).

28
Q

Wage differentials can exist within an industry because of differences in supply…

A

For example within the healthcare industry there is a greater supply of nurses than doctors creating a reward for human capital differential

Economics (27 decks)

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