Demand for labour

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  • Created by: Abbie
  • Created on: 18-04-13 20:31
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  • Demand for labour (MRP theory)
    • Market WR
      • High WR=more costly labour costs=firms switch to cheaper capital
        • BUT firms look more at MARGINAL RETURN of each worker not actual cost
          • Productivity (MRP)-if low MRP=diminshing reuturns=labour  not worthwhile
    • derived demand
      • high demand for good=high demand for labour
    • ease of substitution
    • time
      • LR=more elastic SR=inelastic due to training etc.
    • Productivity (MRP)-if low MRP=diminshing reuturns=labour  not worthwhile
    • wage on-costs
      • if complementary labour costs rise eg national contributions, D for L=fall

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