Labour Market
- Created by: LouLouC
- Created on: 07-03-17 18:57
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- Labour Markets
- Factors Influencing Supply of Labour
- population issues eg health
- education and training
- migration
- mobility of labour
- retirement age/school leaving age
- reduction in benefits
- taxation
- trade union power
- Trade Unions
- provides increased negotiating power for members when bargaining with employees
- e.g education - NUT
- depends on - size of membership, profitability of industry
- monopsy style scenario/ bilateral monopoly situation
- aim is to increase working conditions/pay
- Elasticity of Supply for Labour
- time - where workers take time to acquire skills then PES is inelastic
- available stock - if there is a large availability of people with similar skills then PES will be elastic
- spare capacity - if there is high spare capacity then PES will be elastic
- Market Failure
- geographical immobility
- availability/cost of housing
- +help to buy schemes
- +planning regulations - supply of low cost houses
- +lower stamp duty land tax
- +subsiding rental accomodation
- family ties
- language barriers/work visas
- infrastructure (rural areas or developing countries)
- benefits
- knowledge gaps
- job centre plus - also provides money for travel expenses
- availability/cost of housing
- occupational mobility
- lack of skills/training
- +subsiding training e.g apprenticeships
- +regulation e.g school leaving age of 18
- +direct provision of educatin as merit good
- lack of knowledge
- lack of skills/training
- geographical immobility
- Government Intervention
- National Minimum Wage
- a pay floor below which emploers are not permitted to pay
- +improves living standards of relative poverty/lowest paid
- -real wage unemployment (depends on elasticty) might cause an increase in gov spending on JSA
- -depends on type of industry (more relevant to retail than doctors)
- -magnitude of NMW to preexisting wage rate
- +increases incentives to work
- +decreases spending on top up benefits
- Maximum Wage
- +decrease inequality in the uk
- -lower incentives to work harder, pay isnt enough to offset stress and work
- -brain drain e.g executives move to America
- -reduced tax revenue*
- Public Sector Wage Setting
- public sector pay usually set by pay scale
- in the UK, the gov has high negotiating power due to limited trade union power. the gov can unilaterally agree for public sector workers in SR
- National Minimum Wage
- Factors Influencing Labour PED
- proportion of total production costs that are labour costs
- quality of substitutes
- PED of product
- time SR= more inelastic PED
- Factors Influencing Supply of Labour
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