labour markets

Question 1

derived demand

Answer 1

demand for a factor of production that is used to produce another good or service

Question 2

elasticity of demand

Answer 2

elasticity of demand measure responsiveness of demand after a change in wage rate

Question 3

elasticity of demand determiners

Answer 3

1. labour costs as a % of total costs
2. ease and cost of factor substitution: ; labour demand is more wage elastic when a firm can easily substitute
3. price elasticity of demand for final product
4. time period to switch factor inputs.

Question 4

labour supply

Answer 4

number of hours people willing and able to work at given wage rate

Question 5

Age dependency ratio

Answer 5

Age dependency = (people younger than 15 and older than 64) / (working age people ages 15-64).

Question 6

capital labour substitution

Answer 6

replacing workers with machines in a bid to increase productivity and reduce unit costs of production

Question 7

Demand for labour

Answer 7

he number of workers a firm is willing and able to employ at each wage rate

Question 8

Derived demand

Answer 8

Demand for a factor of production as a result of demand for the final product that that factor of production can produce

Question 9

Discouraged workers

Answer 9

people out of work for a long time who may give up on job search and leave the labour market

Question 10

Discrimination

Answer 10

different treatment of people based on: age, gender, ethnicity, sexual orientation

Question 11

Economic rent

Answer 11

Any amount earned by someone above the minimum amount they require to work

Question 12

Full employment

Answer 12

When there enough unfilled job vacancies for all the unemployed to take paid work

Question 13

Gender pay gap

Answer 13

% difference between mens and womens earnings

Question 14

Geographical immobility of labour

Answer 14

Barriers to people moving within and between areas and regions to find work

Question 15

Gig economy

Answer 15

Fragmented work where someone is given a task for a certain amount of time e.g. delivery couriers

Question 16

Gini coefficient

Answer 16

A measure of income inequality in a country, where 0 represents complete equality and 1 represents complete inequality.

Question 17

Human capital

Answer 17

The amount of skill, knowledge, talent, experience and ability of workers.

Question 18

Labour force

Answer 18

All people who are of working age, and able and willing to work. It includes both the employed, and the unemployed.

Question 19

Labour supply

Answer 19

the quantity of people willing and able to work in an occupation or industry at the prevailing wage rate

Question 20

Labour-intensive production

Answer 20

Labour-intensive production relies mainly on labour e.g. food processing, hairdressing, fruit farming

Question 21

Living wage

Answer 21

hourly wage that provides enough money for a working person to live decently and provide for their family

Question 22

Long term unemployed

Answer 22

people who have been out of work for at least one year

Question 23

Marginal revenue product (MRP)

Answer 23

Extra revenue generated when an additional worker is employed.

Question 24

Minimum wage

Answer 24

A statutory (legal) pay floor in the labour market

Question 25

money wages

Answer 25

“normal wages” actual hourly rate of pay - not adjusted for inflation

Question 26

Monopsony employer

Answer 26

A labour market structure in which there is a single powerful buyer of a particular type of labour.

Question 27

Participation rate

Answer 27

Proportion of the population of working age that is in the labour force (either employed or unemployed).

Question 28

Poverty trap

Answer 28

Situation in which there is no incentive for workers earning a low income to earn extra income, because it would result in having to either pay higher tax and/or losing some of their benefit payments

Question 29

Real wage

Answer 29

The hourly rate of pay adjusted for inflation

Question 30

Relative poverty

Answer 30

A household is in relative poverty if it’s income is below 60% of the median household income.

Question 31

Trade union

Answer 31

collective of workers that use collective bargaining power with employers to negotiate pay and working conditions

Question 32

Transfer earnings

Answer 32

The minimum reward required to keep factors of production, such as labour, in its current occupation.

Question 33

union density

Answer 33

Percentage of a particular labour force that belongs to a trade union

Question 34

Universal credit

Answer 34

Single monthly benefit designed to replace 6 separate benefits for people who are on low income or out of work.

Question 35

Wage elasticity of demand for labour

Answer 35

The responsiveness of the demand for labour to a change in the wage rate of labour. Calculated using the formula: %ΔDL ÷ %ΔW

Question 36

Working poverty

Answer 36

A situation where families with at least one person in paid work have a household income that keeps them below an officially recognised poverty line

Question 37

Zero hours contracts

Answer 37

Jobs that do not guarantee a minimum number of working hours each week