2 supply of labour

Question 1

What are the causes of an increase in the supply of labour?

Answer 1

1)lower qualifications required (lower barrier to entry)
2) lower wages in substitute occupations
3) increase in non-monetary benefits eg more sick leave
4)increased mobility of labour eg EU migration

Question 2

What is the supply of labour?

Answer 2

the number of workers willing and able to supply their labour at the given wage rate

Question 3

How do non-monetary beneefits influence the wage rate?

Answer 3

if job satisfaction is high, the worker is willing to work for a lower wage

Question 4

What is the income effect?

Answer 4

an increase in wages causes incomes to rise so people demand more leisure as it is a normal good and so work less

Question 5

What is the substitution effect?

Answer 5

As wages rise, the opportunity cost of leisure time increases work becomes more rewarding compared to leisure. So people work more and supply more labour

Question 6

What are the determinants of elasticity of supply of labour?

Answer 6

1)mobility
2)qualifications

Question 7

How does worker mobility affect the elasticity of supply for labour?

Answer 7

if workers are able to easily switch between jobs eg in low skilled work then elasticity is high. In specialised jobs it is harder to switch so inelastic

Question 8

How do qualifications affect the elasticity of supply?

Answer 8

In the short run, workers cannot obtain qualifications quickly to inelastic