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economics > labour market > Flashcards

labour market Flashcards

1
Q

what is the supply of labour determined by

A

those who want to be employed

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2
Q

what type of demand is labour

A

derived demand (comes from the demand from what it produces)

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3
Q

what does the downard sloping demand curve show

A

inverse relationship between how much the workers are paid and how many are employed

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4
Q

what could firms do if wages get too high

A

switch out production for capital - cheaper and efficient

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5
Q

factors effecting demand for labour

A

-cheaper substitutes e.g mechanisation
-profit of the firm e.g. AC
-number of firms in the market
-strenght of the economy

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6
Q

calculation for marginal revenue product

A

MRP = MP x MR

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7
Q

what is the marginal product of labour

A

additional output each extra unit of labour can produce

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8
Q

what is the marginal revenue of labour

A

additional revenue derived from each extra unit of labour

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9
Q

inelastic demand for labour

A

strikes and lower supply increase the wage rate

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10
Q

what effects the elasticity of demand

A

labour costs as a proportion of total costs
easy switches to substiutes
PED of the product labour will produce

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11
Q

supply of labour

A

number of people willing to work x hours they can work

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12
Q

non-monetary considerations on supply of labour

A

how satisified and working conditions of their job

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13
Q

what does the upward sloping labour supply curve show

A

the proportinal relationship between how much works are paid and how many are willing and able to work

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14
Q

causes of shifts in the supply curve for labour

A

demographics of the population (school leaving age, immigration)
trade unions (people know their rights can be defended)
taxes and benefits (if too high or low may draw from labour market)

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15
Q

labour market equillibrium

A

where supply and demand for labour meet, which determines the equillibrium price for labour (wage rate) in a perfectly competitive market

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16
Q

why are wages not flexible

A

the minimum wage makes wages sticky
e.g during a recession, the wage rate would not go up. instead workers would be sacked.

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17
Q

what contributes to imperfections in the labour market

A

monopsony power
trade unions
imperfect info

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18
Q

impact of monopsony power

A

there is only one buyer in the labour market, they have wage rate setting power
they will employ where MC=MRp

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19
Q

impact of trade unions

A

if push for higher wage above the minimum wage, labour is likely to be more flexible

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20
Q

how do trade unions demand for higher wages

A

limiting supply - strikes
closing firms
collective bargaining

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21
Q

impact of imperfect information

A

qualified workers may not be aware of higher wages in other indsutries
unaware of benefit in investing in skill and education
can limit production potential

22
Q

aims of trade union

A

protect workers
secure jobs
improve working conditions

23
Q

if trade unions try increase wages too much…

A

firms may not be able to afford to employ workers
firms may close down/reduce the number they employ

24
Q

how do trade unions stop exploitation of worker

A

aim to increase MRP in market and increase wages to the level of MRP

25
Q

in order for the minimum wage to be effective it must be set…

A

above the free market price

26
Q

4 positives of NMW

A

yield positive externalities,
increase standard of living for poorest,
increase incentives to work,
govt make more tax revenue

27
Q

2 negatives of NMW

A

could make it harder for young people to find job due to lack of experience

could make country less competitive on a global scale

28
Q

5 reasons why might people be payed different, even in the same jobs

A

former education - those who have a degree likely to earn more

skills- jobs with more training often mean higher wages

pay gaps- wage gap between skilled an unskilled is increasing in uk due to technological change and globalisation

29
Q

marginal productivity theory

A

employers will tend to hire workers of a particular type until the contribution that the last (marginal) worker makes to the total value of the product is equal to the extra cost incurred by the hiring of one more worker.

30
Q

shifts in demand curve for labour

A

changes in the product demanded
change in the price of the final product
changes in labour productivity
change in the price of capital

31
Q

factors dtermining the elasticity of demand for labour

A

labour costs as a % of total costs (higher = more elastic)

ease and cost of factor substitution (easier = more elastic)

elasticity of demand of the final product

32
Q

shifts in supply of labour

A

wages in alternative occupations
barriers to entry
improvement in occupational mobility of labour
value of leisure time

33
Q

factors determining the elasticity of labour supply

A

more inelastic = higher skills and qualification requirements
time taken to respond to wage changes

34
Q

why is the wage determined by S+D in perfectly competitive markets

A

because they are price takers
many workers have the same skills
identical jobs are on offer
there is perfcet info

the supply curve is perfectly elastic (AC=MC)

35
Q

features of a monopsony labour market

A

they have power to set the wages
there is one employer

36
Q

example of monopsony employer

A

government in employing civil servants, nurses and teachers

37
Q

disadvantages of monopsony

A

exploitation of workers
low wages

38
Q

wage inequality may be caused by

A

skills and qualification differences
gender
pay gaps - skilled and unskilled due to technological change and globalisation
discrimination - age, ethnicity, disability

39
Q

which market structure is most likely to wage discriminbate

A

monopsony as they have wage setting power
e.g a cleaner for NHS will not be payed as much as a doctore for NHS because of the difference in skills and qualificationd required

40
Q

advantages of wage discrimination

A

employers may demand more labour therefor employing more as wage discimination allows firms ot minimise their labour costs

employers can make more profits - supernormal profits which allow the case for dynamic efficiency

41
Q

disadvantages of wage discrimination

A

increases the problem of inequality - those on lowest only paid transfer earnings so may increase relative poverty

can force down the ewage rate in the market - those who want to live in the uk long term may not be satisifed

42
Q

labour market discrimination

A

when specific groups are treated differently in the same job as others with no proven difference in productivity

43
Q

equality act 2010

A

made labour discrimination illegal in the uk

44
Q

conditions necessary for LD

A

ability to identify different groups

45
Q

misallocation of resources LD

A

overqualied workers - skills are underutilised

46
Q

what does LD lead to

A

market failure
higher costs and less efficiency

47
Q

LD cost on gov

A

discirminated against workers may need support e.g welfare benefits and JSA
paying the discriminated against lower wages may mean less tax revenue
lower efficiency = less internationally competitive

48
Q

if firms did not LD

A

increase price competitiveness and no worsening of trade deficit and lower average labour costs

49
Q

advantages of trade unions

A

counter balance monopsony wage setting power
fair representation of employees preventing exploitation
productivity deals
co operation between management and workers
efficiency wage theory

50
Q

efficiency wage theory

A

higher wages = greater incentive to increase productivity and output

51
Q

disadvantages of trade unions

A

pushing wages above the market equillibirum can cause unemployment through firms not being able to afford the costs
cost push inflation (occurred in the 1970s)
in a gig economy it is harder for unions to have an impact

52
Q
A

economics (33 decks)

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