Labour Market 2 Flashcards Preview

Economics REVISION 5 (micro) > Labour Market 2 > Flashcards

Flashcards in Labour Market 2 Deck (23)
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1
Q

What is the labour supply

A

The number of hours that people are willing and able to supply at a given wage rate

2
Q

What does an outward shift of the labour supply curve mean

A

More people are willing and able to work at a given wage rate

3
Q

Why would people become more willing and able to work (shift in supply)

A
  • migration
  • fall in earnings of substitute occupations
  • lower entry barriers to this job
  • demographic factors
4
Q

What does an inward shift in labour imply

A

Fewer people are willing / able to offer themselves for work in a five occupation at the prevailing wage rate / salary

5
Q

Causes of an inward shift in labour

A
  • brain drain effects
  • decline in non-monetary rewards
  • fall in pay
6
Q

Key factors affecting labour supply to a job / occupation

A
  • wage rate (compared to other jobs)
  • qualifications
  • non-monetary characteristics
  • net migration of labour
  • demographic factors
  • preferences
7
Q

Non wage factors influencing supply

A
Risk
Opportunities
Anti-social hours
Pensions
Contract
Training
Overseas
8
Q

Determinants of elasticity of labour supply

A

Skills / qualifications
Vocational nature of work
Time period

9
Q

Elasticity of labour when geographically and occupationally mobile

A

Relatively elastic - even in the short run

10
Q

Elasticity of labour in the SR

A

Relatively inelastic

11
Q

Elasticity of labour in strongly vocational jobs e.g. nursing

A

Less sensitive (less elastic) to changes in wages

12
Q

When does occupational immobility occur

A

When there are barriers to the mobility of factors of production between different industries leading to these factors remaining unemployed or inefficient

13
Q

Why does geographical mobility exist

A
Family and social ties
Financial costs 
Migration caps
Cultural / language barriers
Default behavioural instinct
14
Q

Why may people living in high-price areas want to stay

A

Gain from house price inflation

15
Q

Where employees hired up to

A

The point where the extra cost of hiring an employee is equal to the extra sales revenue from selling their output

16
Q

Causes of pay / earnings differentials

A
  • compensating wage differentials
  • reward for human capital
  • different skills levels
  • differences in productivity and revenue creation
  • trade unions
  • employer discrimination
17
Q

When does a monopsony employer occur

A

When there is a sole or a dominant employee in a labour market

18
Q

What power does a monopsony employer have

A

Wage-setting power

19
Q

For a monopsony what does the supply curve of labour equal

A

The average cost of labour

20
Q

How does a monopsony employer attract new workers

A

Bid up wages

21
Q

Why may increasing the wages by a monopsony employer not attract new workers

A

The wage they pay will not necessarily reflect the true marginal revenue product of people employed

22
Q

Examples of monopsony employed

A

NHS
Armed forces
Amazon

23
Q

Where is profit maximising employment level

A

MCL = MRPL