Chapter 6- Labour market

Symmetric information

When consumers and producers have perfect and equal market information on a good

Asymmetric information

When consumers and producers have imperfect market knowledge leading to miss allocation of recourses

Frictional unemployment

Unemployment while people search for jobs

Structural unemployment

Unemployment due to mismatch of skills and location between job seeker and job provider

Geographical immobility

Obstacles which prevent a worker from moving from one area to find work

Occupational immobility

Immobility due to lack of skills

Government measures to increase labour mobility

Relaxation of planning laws which allow construction firms to build housing

Increasing the construction of social housing

Offering housing subsidies

Improving the operation of job centres so more info is available

Government measures to increase occupational mobility

Increasing provision of training schemes

Increasing provision of further education

Increasing provision of higher education

Specialisation

When an individual, firm or a country concentrated on the production of a limited range of goods and services

Disadvantages of specialisation

If demand for the good falls, it will lead to significant unemployment. If a country is specialising in a good, they will face resource depletion

Division of labour

Where individuals concentrate on the production of a particular good

Advantages of division of labour

Workers become skilled

No time waste moving from one task to another

Technology used more effectively

Less time required to train workers

There is more choice of jobs

Reduced unit cost

Disadvantages of division of labour

May cause boredom causing higher turnover

Makes it easier for capital to replace humans causing structural unemployment

Creates interdependence of one worker on another