Labour

Question 1

define labour !

Answer 1

labour is the human activity directed towards the production of wealth. its payment is the wage rate.

Question 2

why is the demand for labour derived demand?

Answer 2

labour is demanded for its contribution to the production process or from the demand for the goods it produces.

Question 3

describe the demand curve of labour.

Answer 3

downward sloping.

its the MRP curve of all workers

Question 4

what factors affect an individual firms demand for labour?

Answer 4

the MRP of the worker,
wage rate,
the demand for a firms output,
price of other factors of production,
government incentives,...

Question 5

why would a firm not hire an staff member?

Answer 5

if the wage rate that worker is seeking is higher than the revenue that the worker generates

Question 6

what is the supply of labour in the economy ?

Answer 6

it is the total number of hours worked in the economy during a specific period.

Question 7

by what factors is the supply of labour determined?

Answer 7

size of population,
wage levels in the economy,
participation rate,
levels of income tax,
number of hours worked,
labour mobility,
goverment policies

Question 8

define the participation rate of labour!

Answer 8

the percentage of the active population in the labour force / the number of people willing to work, depended on:

social attitudes (age 15-65)
attitudes of homeworkers (full time/part time)
state of the economy
welfare benefits

Question 9

define labour productivity !

Answer 9

the output per worker during a specific period of time.

Question 10

describe the supply curve of labour.

Answer 10

1. as wage rates increase, the supply of labour increases (upward sloping)
2. backward bending : there might be a decline in the S of labour at higher wage rates as workers substitute leisure for labour.

Question 11

where is the equilibrium wage rate?

Answer 11

when the demand and supply curves of labour are bought together, we can find the equilibrium wage rate for the economy.

Question 12

why is there a horizontal supply curve of labour?

Answer 12

in a perfectly competitive market, the individual firm whose demand for labour is so small that it does not influence the wage rate would face a horizontal supply curve of labour.

Question 13

how can a firm restrict entry into a profession?

Answer 13

some professions may curtail the admission of newly qualified staff by increasing the standards of entrance exams.

effect: decreasing supply, increasing wage rates
the supply curve shifts to the left - lower Q at a higher wage rate

Question 14

is there a minimum wage rate for workers?

Answer 14

yes.

trade unions negotiate a wage rate for their members and they usually ensure that there is no supply of labour below the negotiation rate.
in times of high unemployment, wage rates could fall to a very low level - therefor we have a minimum wage rate.

Question 15

what is a wage drift?

Answer 15

this occurs when wage levels rise above the negotiated levels. this occurs when demand for labour increases beyond the available supply at the negotiated rate.

Question 16

define a ratchet economy!

Answer 16

an economy that experiences wage and price increases, usually due to increased demand, but prices and wages do not tend to fall when demand does.

Question 17

what is geographical mobility of labour?

Answer 17

the ability/ ease of a worker to move from one area to another

e.g. moving from Dublin to sligo

Question 18

what factors could inhibit geographical mobility of labour?

Answer 18

existing social connections of a family,
childrens education,
cost of selling and buying a house,
fear of a major life-change

Question 19

what are the economic policies that could increase geographical mobility?

Answer 19

increase housing,
education facilities,
social infrastructure,
government supports,
updated information

Question 20

what is occupational mobility of labour?

Answer 20

the ease/ability of a worker to move from one job to another

Question 21

what factors can discourage occupational mobility?

Answer 21

loss of high degree of skill and specific training,
high costs for new trainings,
exams a entry

Question 22

what are the economic policies that could increase occupational mobility?

Answer 22

education courses,
training,
government policies,
trade union barriers

Question 23

what factors may influence the elasticity of demand for labour?

Answer 23

percentage of labour costs to total costs,
substitutability of labour,
elasticity of demand,
productivity of labour

Question 24

what factors affect the efficiency of labour?

Answer 24

amount of training,
management expertise,
level of education,
innate talent,
quantity/quality of other factors avaibable,
living condition of the workers,
degree of specialization,
climatic conditions,
dedication of workers

Question 25

how appropriate is MRP for setting wages in the public sector?

Answer 25

physical output is not always produced,
non-market output,
capital and labour used together

Question 26

why do different categories of workers receive different wages?

Answer 26

different skills,
lenkt of training,
educational qualifications,
nature and conditions of the job,
possession of innate talent,
tradition attached to certain jobs,
non-monetary benefits,
negotiating strength of the workers trade union

Question 27

outline 2 developments, other than a fall in the MRP, which may result in a firm reducing its number of employees!

Answer 27

describe 2 :

demand for pay increases,
introduction to new technology,
fall in demand for the firms output,
government policies,
increased competitionin the market,
increased cost of production