Edexcel Economics A-level Theme 3.5 Labour Markets Flashcards

Flashcards for Edexcel Economics A-level Theme 3.5 Labour Markets

What is the labour market?

A factor market where the supply of labour is determined by employees and the demand is from employers.

What is meant by 'derived demand' in the context of labour?

Demand for labour is derived from the demand for what it produces.

What factor causes movement along labor supply and demand curves, and what factors shift the curves?

The wage rate will lead to movements along the supply and demand curves for labour; all other factors will shift the curves.

What factors affect the demand for labour?

The wage rate, demand for products, productivity of labor, substitutes for labor, profitability of the firm, and the number of firms in the market.

Why might firms consider switching production to capital when wages increase?

Firms might switch production to capital if wages get higher because capital might be cheaper and more productive.

How does the demand for products affect the demand for labour?

The higher the demand for products, the higher the demand for labour, since the demand for labour is derived from the demand for products.

How can the productivity of labour be increased?

Increased education and training, and the use of technology.

What factors influence the supply of labour to a particular occupation?

Demographics of the population, the wage rate, migration, advantages of work, leisure time, trade unions, taxes and benefits, and training.

How is the supply of labour calculated?

The number of workers willing and able to work at the current wage rate, multiplied by the number of hours they can work.

How does migration affect the supply of labour?

Migrants are usually of working age; migration particularly affects the supply of labour at the lower wage rates.

What are some examples of geographical immobility of labour?

Family and social ties, the financial costs involved with moving, imperfect market knowledge on work, and regional variations in house prices and living costs.

What are the causes of occupational immobility of labour?

Insufficient education, training, and skills.

How is labour market equilibrium determined?

Where the supply of labour and the demand for labour meet, determining the equilibrium price of labour (i.e., the wage rate).

What are 'sticky wages'?

Wages in an economy do not readily adjust to changes in demand.

What factors contribute to wage differentials?

Formal education, skills, qualifications and training, pay gaps, wages and skills, gender, and discrimination.

What factors contribute to wage differentials?

Formal education, skills, qualifications and training, pay gaps, wages and skills, gender, and discrimination.

What is the impact of migration on labour markets?

Migrants tend to bring high quality skills, but can also increase competition for jobs and potentially lower wages for the lowest paid.

Why is unemployment a problem?

Consumers have less disposable income, and there are psychological consequences; the government may have to spend more on JSA (Job Seeker's Allowance).

What is hysteresis in the context of unemployment?

A type of structural unemployment where someone is out of work for a long time, so their skills deteriorate.

What is an example of a minimum price in the labour market?

The National Minimum Wage.

What is a maximum wage (wage ceiling)?

It limits how much income someone can earn and is used as a means to redistribute wealth more equitably in society.

What is the public sector?

The public sector is the compilation of industries owned by the government.

What is the flexibility of the labour market?

How willing and able labour is to respond to changes in the conditions of the market.

What factors affect labour market flexibility?

Trade union power, regulation, welfare payments and income tax rates, training, infrastructure, and housing.

What does the elasticity of demand for labour measure?

Measures how responsive the demand for labour is when the market wage rate changes.

What factors affect the elasticity of demand for labour?

How much labour costs as a proportion of total costs, the ease of substituting factors, and the PED of the product.

What is the elasticity of supply of labour?

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

What factors affect the elasticity of supply of labour?

The skills of the workforce, length of training, sense of vocation, and time period.