6.2 influences on the supply of labour

Question 1

what are the causes of a change in the supply of labour?

Answer 1

1) lower qualifications required ( lower barrier to entry)
2)non monetary considerations
3)migration/ size of the working population eg EU free mobility of labour
4) wages in substitute occupations

Question 2

what are the determinants of the elasticity of labour?

Answer 2

1) skills required/MRP
2)mobility of labour
occupational - time taken to earn qualifications/switch jobs
geographical- EU migration to fill labour shortages

Question 3

what does the supply curve show?

Answer 3

the relationship between the wage rate and the number of workers willing to supply their labour at that wage rate.

Question 4

how does job satisfaction influence the wage rate?

Answer 4

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

Question 5

How do workers decide how much to work?

Answer 5

When their utility is maximised ie opportunity cost of leisure time is equal to the wage earned

Question 6

What is the income effect?

Answer 6

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

Question 7

what is the substitution effect?

Answer 7

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