Micro Flashcards
(21 cards)
Monopsony definition
The sole employer of labour in a given industry
Assumptions of monopsony
Wage maker
Maximising rev from workers by hiring her mrp = mc
Employment and wages down
Lower wages compared to mrp = higher monopsony power
Demand curve for labour theory
How many workers will be hired at any given wage rate over a period of time
Where will firms hire workers
Until mrp = mc = w
Wage differentials and labour market imperfications
Would not exist in perfectly competitive g labour markets
Labour is not homogeneous
Non monetary considerations
Labour is not perfectly mobile
Monopsonies and wage setting ability
Trade union an supply restrictions
How is labour not homogenous
Different mrp
Different supplies of labour
Discrimination
He are exmples of non monetary considerations
Pensions
Holidays
Job satisfaction
Safety
How is labour not perfectly mobile
Occupational polity
Geographical mobility
Lack of perfect knowledge
What are trade unions
Organisation of workers involved in collective bargaining
Assume “closed shop”. All workers in 1 trade union
Tu monopoly supply of labour
Tu controls labour supply at given wage rate
Evaluation of trade unions
Beefitual in monopsony market - already hire less than should
Strength of tu power union density. 22.4 % of workers involved in tu in 2023
Closed shop is illegal so workers are spread in different unions
What is real life evidence of tu limitations
75% need to agree to strike and must be over you’re employer
Restricting of uk economy. Away from manufacturing services
Harder to organise tu in service industry with more firms
Competitive pressures means firms can relocate abroad
Traits of perfect comp
Many workers n mployees
Labour is homogenous
Perfect info
Firms are wage takers - take from market
No barriers to entry and exit
Y ped supply curve for individual bend backwards
Income nd substitution effect
Causes for labour supply shifting
Wage in other substitute occupations
Barriers to entry and exit
Non monetary charecteristics of the job
Improvements in occupational mobility of trainin
Size of work force - brexit down
Value of leisure time
Causes of demand shifting
New machinery available
Demand of product
Change in final pric of product
Change in labour productivity
Factors affecting elasticity of demand
Sect
S - ubdtitute of capital for labour: eg lawyer little
E - lasticity of demand for the product
C - ost of labour as % of total cost - insignificant inslastic
T - Imr period
Elasticity of skills curve
Nature of skills required
Length of the training period
Vocation - motive for working
Time given to hand on notice
What are social tariffs
Giving poorer people cheaper prices
