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ECONOMICS THEME 3 - TOPIC 3.5 - LABOUR MARKETS - Coggle Diagram
ECONOMICS THEME 3 - TOPIC 3.5 - LABOUR MARKETS
demand for labour
the demand curve for labour shows the
quantity of labour that employers would wish to hire at each possible wage rate
derived demand
- firms hire workers in order to produce goods to meet their aim. Therefore, the demand for labour is derived from demand for the product the labour produces
factors influencing demand for labour
prices of other factors of production
if machinery becomes cheaper, people will switch to it and labour demand will fall
wages in other countries
demand for product
as it's derived demand, if there is no demand for the product there will be none for labour
regulation
high regulation can discourage firms from hiring
wage rates
a wage is the price of labour and as it increases, there is less demand for labour
technology
may kick people out of jobs as they're replaced by computers
price elasticity of demand
this is the
responsiveness of the quantity demanded of labour to the wage rate
factors effecting PED of labour...
the proportion of wages to the total costs
substitutes e.g machinery
the PED of the product
time
supply of labour
the supply of labour curve shows the
ability and willingness of people to make themselves available to work at different wage rates
factors affecting supply of labour...
education/training
trade unions + barriers to entry
non-monetary benefits
e.g free private healthcare
other jobs
population + distribution of age
legislation
wages
market failure
immobility
labour can suffer from either occupational or geographical immobility
they can suffer from
occupational immobility
where workers find it difficult to move from one job to another due to a lack of transferable skills
geographical immobility
is where they find it difficult to move from one place to another due to the cost of movement, family, etc
elasticity of supply
the responsiveness of supply to a change in wage rates
depends on the level of qualifications and training as if jobs need qualifications people won't be able to vacate them, making supply of labour inelastic
it can also depend on the availability of suitable labour in other industries
also depends on time as in the long run supply of labour will be even more elastic as people will have time to train
wage determination
wage rates differ due to age, education, training, skill, etc
in a perfectly competitive market, wages are determined purely by demand and supply and all workers are paid the same
however, in imperfectly competitive markets, wages will not always be set where demand = supply
labour market issues
skills shortages
occupational and geographical immobility
young workers
struggle to get jobs
retirement
retirement age continues to rise as pensioners makeup 50% of welfare spending
wage inequality
zero hour contracts
uncertainty amongst workers on these
the 'gig' economy
self employed + short term contract workers are increasing and there is uncertainty amongst job security and pay
migration
possible cause for fall in wages
government intervention
minimum wage
arguments for...
reduce poverty
reduce male/female pay gap
more motivated and content work force
incentive to work
arguments against
potential loss of jobs in industry
raise costs for company
maximum wage
may encourage some people to join the industry but can also lead to the loss of the best workers
public sector wage setting
effects the demand for private sector jobs
tackling immobility
improve transport links
national advertising
improve supply of houses
vocational training and encouraged education