3.5. Labour Markets

Question 1

Factors influencing the demand for Labour of a particular occupation

Answer 1

• Labour productivity
• Price of other factor inputs
• Demand for the product
• Supplementary labour costs (e.g. maternity leave)

Question 2

Factors of the elasticity of demand for labour

Answer 2

• Substitutability
• Ratio of labour costs to total costs
• Time

Question 3

Factors influencing the supply of labour

Answer 3

• Wages
• Population and distribution of age
• Education
• Trade unions
• Legislation

Question 4

Elasticity of supply factors

Answer 4

-

Question 5

Wage differentials - supply

Answer 5

• Compensation
  
  • Cost of risky job or area of high spending e.g. London rates
• Greater supply of lower-skilled labour

Question 6

Wage differentials - demand

Answer 6

• Value of labour
• Resources of employees
• Age differences
• Employer discrimination
• Difficulty of observing workers (mrp)

Question 7

Industries most affected by minimum wage

Answer 7

• Hospitality
• Agriculture
• Retail

Question 8

Rise in minimum wage on consumers

Answer 8

• Rise in costs might be passed down
• Firms will look to protect their profit margins by raising prices

Question 9

Rise in minimum wage for workers

Answer 9

• benefit from higher wages

Question 10

Rise in minimum wages of producers

Answer 10

• Rise in labour costs
• reduction in profitability
• Rise in cost (AC or MC&AC)

Question 11

Trade unions on govts freedom to set public sector wages

Answer 11

• If weak, in the short run the government can make whatever wage decision they want to improve their budget