9.0 - labour demand and supply Flashcards
(20 cards)
define ‘labour market’
9.1 - demand for labour
the interaction between individuals seeking employment and income, and employers seeking labour
describe the nature of the demand for labour
9.1 - demand for labour
demand for labour is a derived demand, only demanded for the firm to produce G&S and make profit
it is a downward sloping curve, as cost of labour falls, firms employ more labour
note the factors that affect labour demand
9.1 - demand for labour
- output of a firm
- general economic conditions
- demand for firm’s product
- cost of labour vs other FOP’s
- productivity of labour vs other FOP’s
- cost of labour vs foreign labour
describe the influence of general economic conditions upon labour
in regard to aggregate demand, specific industries and individual firms
9.1 - demand for labour
**aggregate demand **
- demand for labour usually + relationship with the business cycle
- may not lead to immediate change (excess capacity, delay in dismissal)
industry
- change in consumer tastes and preference = change in labour allocation
- barrier to enter industry, level of regulation and price competition
individual firms
- relies on quality of product, reputation and size of firm
- can still achieve growth in market share
describe the productivity of labour and its factors
9.1 - demand for labour
the output per unit of labour per unit of time (productivity = total output/labour input)
- depends on the quality of workforce (education, skills, health and motivation) and the efficiency of FOP pairing
describe the possibilities of change in the occurance of an increase in labour productivity in the short term
9.1 - demand for labour
- if rate of AD + more than LP (increase in LD)
- if rate of AD = with + in LP (firm’s in excess capacity and labour demand falls)
- if rate of AD - than LP (extreme fall in LD and less output demand)
what are the long term implications of an increase in labour productivity
9.1 - demand for labour
- reduction in other FOP’s
- labour a more attractive input
- eventually new technology and capital increase to maintain/increase output with less labour costs
describe the influence of the costs of other inputs on the productivity of labour
9.1 - demand for labour
- ratio of capital and labour
- cost of labour included non-wage costs (entitlement)
- cost of capital (interest rates, structure of tax system)
- demand and productivity of labour in other countries
- human capital (total sum of knowledge, skills, training and experience that contribute to productivity)
determine what increases the elasticity of firms labour demand
9.1 - demand for labour
- easy substitution of labour for capital
- labour costs are a hgih proportion of total production costs
- more difficult for firms to increase product prices (owing to increase in labour costs)
name the factors that influence labour supply
9.2 - the supply of labour
- pay levels (and non-wage benefits)
- working conditions
- education, skills and requirements
- mobility of labour (occupational and geographical)
state the differences between occupational and geographical mobility of labour
9.2 - the supply of labour
- occupational (ability of movement between occupations in response to wage differentials and employment opportunities)
- geographical (movement between locations in regards to cost of relocating and personal upheval)
define the labour force participation rate
9.2 - the supply of labour
the proportion of the working age population (15+/15-64) that decides to supply labour
- 100(labour force/15+ yrs)
describe the short term influences on participation rate
9.2 - the supply of labour
state of the economy
- participation rate is pro cyclical
- economic conditions change rapidly and people more likely to enter industry after breaks
describe the long term influences on participation rate
9.2 - the supply of labour
- ageing population and age of retirement
- social attitudes (women in workforce)
- school retention rates
external forces of the participation rate
9.2 - the supply of labour
- gov. policy surroudning immigration of skilled workers
- professional associations place standards of education, training and conduct
- gov. implications of qualification and license restrictions
define human capital
9.2 - the supply of labour
the total sum of knowledge, skills, training and experience of workers that contribute to production
describe the influence of population size on the workforce
9.3 - the australian workforce
- sets the limit of workforce growth
- population grows at a result of natural increase and net migration
state the nature of migration in australia
9.3 - the australian workforce
- contributes to 40% of total population since WWII
- heavy fluxuation from economic activity
- labour shortages = gov. + migration quotas
- increase migration = + demand for housing and public services (aggregate supply > aggregate demand)
explain the nature of age distribution in australia
9.3 - the australian workforce
- age gap (15-65) is declining due to ‘baby boomers’ in retirement
- result of - birthrates and + life expectancy
describe educational patterns in australia
9.3 - the australian workforce
- OECD (Organisation of Economic Cooperation and Deveopment)
- 2021 - employment rate 7% lower for someone with tertiary education
- increase of 20-64 yr with post-school qualification ((2004) - 55.8%, (2022) - 69.4%)
- 2022 - AUS 6.1% of budget on education > average
