Demand for labour
- 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
- BUT firms look more at MARGINAL RETURN of each worker not actual cost
- High WR=more costly labour costs=firms switch to cheaper capital
- 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
- Market WR
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