3.5 labour markets Flashcards
(14 cards)
Factors influencing demand for labour
-wage rates as wage rates increase demand for labour contracts since less people are employed
-demand for the product
-prices of other factors of production if machinery and equipment becomes cheap people will switch
-wages in other countries
-technology
-regulation
What does the demand curve for labour show
The quantity of labour that employers would wish to hire at each possible wage rate
Factors affecting PED of labour
-it is directing correlated to the ped for the product the labour produces
what is PED of labour
the responsiveness of the quantity demanded of labour to the wage rate
what is supply of labour
the ability and willingness o people to make themselves available to work at different wage rates
factors influencing supply of labour
-wages
-population and distribution of age
-non monetary benefits e.g flexibility, opportunities for promotion etc
-education/training/qualification
-trade unions and barriers to entry
-wages and conditions of other jobs
-legislation
occupational immobility
where workers find it difficult to move from one job to another because of a lack of transferable skills
geographical immobility
they find it difficult to move from one place to another due to things the cost of movement, family etc
labour market issues
-skills shortages geographical and occupational immobility
-young workers during hard times firms are reluctant to employ new workers so the young struggle to get a job
-retirement pensioners make up 50% of welfare spending so the retirement age will continue to rise to encourage people to have their own pensions
-wage inequality those on higher wages tend to see their wages grow by a higher percentage than those on the lowest wages
-zero hour contracts employees don’t know how much they will earn each week and receive little notice from when they are required to work
-gig economy e.g deliver and uber with concerns over their rights and unreliability of pay each week
-migration
national minimum wage
introduced in April 1999 to raise people out of poverty and decent mimimum standards in the workplace
arguments for minimum wage
-reduces poverty
-reduces male/female wage differentials
-make people less likely to leave their job as they feel more loyal to the business which will decrease labour turnover
-more content workforce who are more motivated and therefore making the business more productive
-avoids the unemployment trap where benefits are higher than the wage people would receive otherwise so provides an incentive to work
-fair wage so people aren’t exploited
arguments against minimum wage
-potential of job losses in the industry
-raise costs for companies
-wage spiral, as minimum wage increases others will expect their wage to also rise
-no consideration of regional differences
minimum wage macro effects
-able to reduce inequality
-lead to a rise in AD, since the poorest see a rise in income leading to economic growth and employment
how to tackle immobility
-improve the supply of houses which will reduce price making it easier for people to move
-improve transport links which will allow people to work further away
-national advertising so people know about jobs all over the country
-move public agencies out of London this won’t improve mobility of labour but it helps prevent excess demand for labour in one place and excess supply in another
-vocational training to improve skills shortages and helping with job applications
