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Labour Market - Coggle Diagram
Labour Market
Determination of wages through supply and demand
If demand for labour increases then the demand curve moves from D to D1. This leads to an increase of wages from W to W1.
If supply for labour increases then the supply curve moves from S to S1. This leads to a fall in wages from W to W1.
If PED and PES are both inelastic then the wage may be high as employers are willing to pay a high price to get the right person and the supply is limited.
If PEG and PES are both elastic then the wage may be low as employers don't want as many people if wages rise and supply is plentiful
If PES is totally inelastic then the wage is wholly dependent on how many want to employ the person
Operation of the Labour Market
The labour market operates on a local, national and international basis
Some jobs require particular qualifications and skill sets, while others are geographically fixed
The labour market is dependent on the exchange of information between employees and employers on: wage rates, employment conditions, level of competition, location etc.
It lacks perfect mobility
Role of the Labour Market
To determine the wage rate and salary for this work
To enable workers that are willing to sell their labour to meet employers who are willing and able to offer them jobs
Interaction of workers and employers
Individual worker and employer
The worker deals directly with employer about pay etc.
Collective bargaining
Trade unions bargain for all their members with employer
Factors Affecting Supply and Demand for Labour
Demand
Demand for products
Wage rates
Real wages
Productivity of labour
Profits of firms
State of the economy
Supply
Wage rates
Other monetary payments
Non-monetary factors
Education and training
Barriers to entry
Size of working population
Gross and net pay
Net pay: The amount of money that an employee is left with after deductions are made from gross pay.
Gross pay: The amount of money that an employee earns before any deductions are made