4.1.6.2 - Influences upon the Supply of labour to different markets

Supply of Labour =

The quantity of labour that a worker is willing and able to supply at different hourly wage rates

Why is the Supply curve of Labour Upwards Sloping?

• Substitution effect - ↑Wages → reward for working increases → Workers substitute leisure for labour by working more hours → Supply increases (extension)

Factors causing a MOVEMENT along a firm’s Supply of Labour

Monetary Factors

‎

• Wage Rate

• Bonuses

Factors causing a SHIFT in a firm’s Supply of Labour

Non-Monetary Factors

• Holidays - more holidays → ↑satisfaction → supply shifts right

• Occupational Mobility - increase in training/educaiton

• Geographical Mobility

• Wages in other jobs

• Changes in Population - rise in immigration → supply increases

Elasticity of Supply of Labour (definition + formula)

Responsiveness of quantity supplied of labour to a change in the wage rate.

= % Change in Quantity Supplied / % Change in Wage Rate

Determinants of Elasticity of Supply of Labour

• Barriers to Entry:

  • Occupational Mobility - More skills & qualifications required, longer training period → more inelastic

  • Geographical Mobility - Higher house prices → more inelastic

• Time Period - In LR, more elastic

• Unemployment - When high u/e, more workers competing for same jobs → more elastic