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economics yr 11 > topic 4 > Flashcards

topic 4 Flashcards

1
Q

What is the labour market?

A

when supply and demand of labour interact to set a wage
- households supply
- firms demand

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2
Q

Labour is a ___

A

derived demand related to the demand for the product and productivity

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3
Q

What are the affecting factors of labour demand?

A
  1. firms output (increase in production = increase in demand = right shift)
  2. productivity (increase in productivity=decrease in demand = left shift)
  3. cost of other inputs (decreased cost of capital = decrease in demand = left shift)
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4
Q

Movement along the demand/supply curve (expansion, contraction) is from___

A

change in wages

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5
Q

Movement of the demand/supply curve (left, right shift) is from ___

A

change in anything but wages

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6
Q

What is the supply of labour?

A

amount of people offering their labour at different wage rates
opportunity cost = free time vs work
wage rate must overcome this OC

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7
Q

Micro factors affecting labour supply?

A
  1. better working conditions (right shift)
  2. more training requirements (left shift)
  3. more occupational mobility (right shift)
  4. more geographic mobility (right shift)
  5. wages/incentives (movement along curve)
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8
Q

Macro factors affecting labour supply?

A
  1. change in size of population
  2. change in age distribution (ageing population, etc.)
  3. change in participation rate (working age population in labour force)
  4. change in hours worked (full time, part time, etc.)
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9
Q

Structure of the labour market

A

Population (24 million) –> working age population (over 15) –> labour force –> employed

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10
Q

Macro factors affecting population

A
  1. birth rate
  2. migration levels
  3. age distribution
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11
Q

What is the working age population:

A

refers to those 15 years and older in the population
- can’t directly affect working age as it is based on age
- indirectly uses population

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12
Q

What is a labour force and what group’s aren’t in it?

A

refers to those over 15 who are working or actively seeking work (can never be 100%)
not in labour force:
- pensioners
- stay at home mums
- rich people
- students

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13
Q

Macro factors affecting labour force?

A
  1. wages/incentives
  2. working conditions/non-financial incentives
  3. education/skills (needed to join)
  4. geographic/occupational mobility
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14
Q

What is hidden unemployment?

A

people who have given up looking for work but aren’t unemployed (haven’t signed onto centrelink) and are therefore NOT in labour force
POLICY RESPONSE: reduce welfare, higher minimum wage, etc.

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15
Q

What does Unemployment mean?

A

refers to those over 15 willing, able and actively seeking work but not employed

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16
Q

What does employment mean?

A

to those over 15 who are working at least one hour a week paid (unpaid if family business) or on paid leave

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17
Q

How to calculate the labour force participation rate?

A

labour force
/ x 100
working age population

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18
Q

How to calculate unemployment?

A

total U/E
/ x100
labour force (employed + unemployed)

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19
Q

What are the benefits of U/E?

A

increases incentives and productivity and output

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20
Q

What are the types of U/E?

A

Full employment
Cyclical U/E
long-term U/E
Structurally U/E
Frictional U/E
Seasonal U/E
Hard core U/E

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21
Q

What is full employment

A

occurs when cyclical U/E is at 0, unemployment is stable at 4-4.5% (only structurally U/E are unemployed)

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22
Q

What is cyclical U/E?

A

involuntary unemployment (have skills but not enough output) caused by contraction in AD (decreased derived demand for labour)
- fluctuations in employment due to BC swings
POLICY RESPONSE: stimulate AD

23
Q

What is long-term U/E?

A

unemployed more than 12 months (out of touch with job)
POLICY RESPONSE: retraining

24
Q

What is structural unemployment?

A

mismatch of skills of the unemployed to those needed in the economy caused by structural change
- biggest contributor to U/E
- short term stable number
- increasing in long term (increasing use of technology)
POLICY RESPONSE: retraining

25
Q

What is frictional unemployment?

A

caused by those moving between jobs, people transitioning in and out of economy (e.g mums)

26
Q

What is seasonal unemployment?

A

related to frictional but caused by seasonal changes in specific industries
POLICY RESPONSE: promoting industry (e.g VIVID is during winter)

27
Q

What is Hard core U/E?

A

caused by those people being incapable of performing well (poor people skills, mental incapacity)
POLICY RESPONSE: retraining

28
Q

What is youth unemployment?

A

means a lost opportunity to build human capital (no experience gain) and greater chance of long term U/E

29
Q

What is the underutilisation of labour?

A

sum of unemployed and underemployed (on casual/part time and wanting more work) as percentage of labour force

30
Q

Structural change in workplace?

A
  • casual/part-time work
  • gig economy being independent contractors (e.g uber, deliveroo)
  • zero hour contracts
  • increase in labour mobility
  • growth in STEM jobs
  • technology and AI
  • women entering labour force
31
Q

What are labour market policies?

A

any micro government policy which affects wage levels, work practises, dispute resolution methods for labour

32
Q

What are income policies?

A

strategies to influence or set price on labour costs and conditions set by government in an attempt to control inflation (planned economy)

33
Q

What is decentralised wage determination?

A

moving away from government with wages determined by firms (enterprise bargaining systems)

34
Q

What is a centralised wage system

A

central authority sets wage levels (government). the safety net is a centralised approach.

35
Q

What is the industrial relations system (IR)

A

framework for managing labour forces including
- minimum working conditions (11 min NES)
- wage determination (centralised and decentralised)
- dispute resolution (tribunals)

36
Q

What are labour market policies?

A

help labour markets operate more efficiently (efficiency story through free market) and provide flow on benefits to the community through worker protections (fairness story through government intervention)

37
Q

What is fairwork australia?

A

independent body which replaced the IR in 2009 started by Kevin Rudd which
- establishes and reviews modern awards
- approves enterprise agreements
- adjudicates unfair dismissals
- conduct dispute resolution

38
Q

What is the fair work ombudsman?

A

independent government pffical appointed to investigate complaints by individuals against authorities and institutions
- single point of contact
- educate and provide advice about rights
- investigate claims
- litigate to enforce laws

39
Q

What are the types of contracts?

A

Awards
Enterprise Bargaining Agreements
Individual employment contracts

40
Q

What are awards?

A

government outlines the minimum wages and working conditions that must be granted to all employees (mainly for low income earners)

41
Q

What are enterprise bargaining agreements?

A

firms determine wages and conditions by employees collectively negotiates with employers (mainly for skilled workers)
- this agreement must be approved by the fair work act

42
Q

What is an individual employment contract?

A

when individual workers get to personally negotiate agreements (mainly for highly skilled workers)
- they have to sign a non-disclosure agreement

43
Q

What is the australian workplace agreement?

A

Introduced by Howard and called work choice legislation in which awards and enterprise bargaining was a wage system controlled by firms like individual employment

44
Q

What is the employment safety net?

A

centralise system because of government enforcement of (do no apply for gig economy workers or highly skilled proffessionals)
1. 11 national employment standards
2. minimum wage (decided by minimum wage panel)

45
Q

How is minimum wage decided?

A

Annually on the 1st of July, the minimum wage panel in the fair work act determines the minimum wage based off:
- employee unions
- employers
- government
- analysis of business cycle

46
Q

What does the minimum wage reflect?

A
  • productivity
  • inflation
  • cost of living
47
Q

What are penalty rates?

A

additional payments for employees who work outside regular hours (used in fast food, retail, hospitality, etc.)

48
Q

What is minimum wage?

A

lowest wage permitted by law or by a special agreement and increasing over the years to:
- improve living standards
- economy still growing
- improved productivity
- inflation

49
Q

What is a trade union?

A

employee organisations represents collective groups of workers in each industry. have power in a unified approach to wage negotiation and strikes (industrial action to magnify impact). aim to
- protect living standards
- protect against unfair dismissal
- promote improvements in working conditions/training
- counter balance monopsony (single buyer of labour)

50
Q

Why are less people joining trade unions?

A
  • workers have more power because of skill specialisation (structural change)
  • move to casualisation
  • increase in capital manufacturing
51
Q

Case against trade unions?

A
  • restrict supply of labour market (minimum wage is a price floor which leads to an excess supply of labour, increasing U/E = wages up = less employed) (not true because curves are inelastic)
  • wages up = cost up = inflation up (cost-push inflation)
52
Q

What are employer organisations?

A

represent groups of businesses for similar labour and government issues, seeking more deregulated competition free from unions and gov intervention. they
- moderate wage growth
- moderate excessive working conditions demands
- link wage increases to productivity increases
- decentralise broad wage agreements
- more flexible labour supply (fire and hire when needed based on BC)

53
Q

Arguments for centralised wage system and against decentralised system

A
  • economic management (control wages in relation to inflation)
  • greater equality (protects workers from the economic worth of labour by considering the minimal bargaining power of unskilled workers)
  • less industrial action (gov is a NGO)
54
Q

Arguments against centralised wage system and for decentralised system

A
  • higher inflation (since wages are increasing, consumption increases and cost-push inflation increases –> wage price spiral)
  • lower efficiency and productivity (since wage rises are linked to inflation, there are no opportunities for individual bonuses and therefore decrease in incentive and output)

economics yr 11 (7 decks)

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