Labour Markets Flashcards
(16 cards)
What is Marginal revenue product of labour (MRPL)?
The extra revenue generated
when an additional worker is employed
What is the formula for Marginal Product of Labour?
MRPL = marginal product of labour x marginal revenue
Limitations of MRPL?
• Difficult to measure productivity for many jobs
• Labour productivity can depend on other inputs e.g. quality of capital
• Some work is collaborative – hard to work out an individual’s productivity
• Some workers. E.g. self-employed, set their own pay
What is Wage Elasticity of Demand?
The responsiveness of quantity of labour demanded to a change in the wage
What is the formula for Wage Elasticity of Demand (WED)?
WED = % change in Q. of labour demanded/% change in wage
What does Wage Elasticity of Demand depend on?
WED depends on: what % of total costs are labour costs; the ease and cost of factor substitution, the PED of the final product and the time period
What is the Labour Supply Curve?
The relationship between the wage rate and the number of workers willing to work in a particular occupation
What does the Supply of labour to a particular type of occupation depends on:
Supply of labour to a particular type of occupation depends on:
• Monetary rewards: wage, overtime
pay, bonuses….
• Non-monetary rewards: job
satisfaction, working conditions,
holiday entitlement, status, working
hours
What causes a shift in Labour Supply?
• Changes in the non-monetary/non-pecuniary benefits of work
• Changes in working conditions
• Changes in taxation and welfare benefits
• Changes in the wages of different occupations
• The occupational and geographical mobility of labour
• The role of trade unions and professional bodies
• Net immigration
What is Wage Elasticity of Supply?
The responsiveness of quantity of labour supplied to a change in the wage
What is the formula for Wage Elasticity of Supply?
WES = % change in Q of labour supplied/% change in wage
What does WES depend on?
The nature of skills and qualifications required to work in an industry, the vocational nature of work, the time period, the occupational and geographical mobility of labour.
What is Occupational Immobility?
When there are barriers to people being able to switch between one job and another
What does Occupational Immobility cause?
• Skills gaps
• Training gaps
• Experience gaps
• Confidence and motivation
What is Geographical Immobility?
When there are barriers to people being able to move to a new location for work
What does Geographical Immobility cause?
• Housing and other living
costs
• Family/social ties
• Lack of transportation
Labour immobility can reduce the supply of labour to some occupations
