labour market

Factors of Production

Definition: Man-made assets assisting in wealth production (e.g., machinery).
Types:
- Social (e.g., hospitals, roads).
- Working (finished goods, raw materials).
- Fixed (plant, equipment).
- Private (computers, cars).
Interest as payment for capital: Rewards savers for not spending.
Marginal Efficiency of Capital (MEC): Extra profit from employing one more unit of capital.
- Entrepreneurs invest where MEC is highest.
- Higher interest rates reduce demand for capital.

Organizes other factors to produce goods/services.
Differs from other factors:
- Can earn a loss.
- Returns vary (supernormal profits to losses).
- Return is residual (received after other factors are paid).

Human activity directed towards wealth production; payment is wages.
Economic rent: Excess earned above supply price.
Factors influencing demand for labor:
- Wage rate (lower wage, higher demand).
- Demand for firm's output (high demand increases labor needs).
- Price of other factors.
- Government incentives (e.g., reduced employer PRSI).
- Availability of new technology (may decrease labor demand).
- Taxation levels.
- State subsidies.
- Entrepreneur's expectations.
Marginal Revenue Productivity (MRP): Extra revenue from employing one more unit of labor.
- Firms maximize profit when wage rate equals MRP.
- MRP curve is the demand curve for labor; downward sloping.
Labour Hoarding: Firms continue to employ labor even if unprofitable.
Why MRP curve slopes downward:
- Law of diminishing returns.
- Law of demand.
Factors influencing MRP:
- Productivity of the factor.
- Selling price of output.
Marginal Physical Product (MPP): Extra output from one additional unit of a factor.

Total hours worked in the economy during a period.
Factors influencing supply:
- Size of population.
- Wage levels.
- Labour Force Participation rate.
- Social attitudes (retirement age, school-leaving age).
- Homemakers.
- State of the economy.
- Welfare benefits.
- Level of income tax.
- Number of hours worked.
- Labour mobility.
- Immigration levels.
Labour supply curve is generally upward sloping.
Equilibrium wage rate: Where demand and supply curves intersect.
Minimum wage legislation: Governments enforce to tackle low pay.
- Can lead to unemployment if set above equilibrium.

Mobility of labour is the ease with which workers can move from one region to another.
Geographical mobility: Ability to move from one area to another.
Occupational mobility: Ability to move from one job to another.
Economic policies to increase:
- Increased housing; Educational facilities; Social infrastructure; Government supports.

Factors affecting:
- Training; Management expertise; Education; Innate talent; Availability of other factors; Living conditions.
Ireland has high productivity due to a skilled workforce and presence of MNCs.
Impact of rising productivity:
- Increased incomes; Economic growth; Lower inflation.
Wage differences due to skills, training, education, job conditions, and talent.

Labour Shortages are a situation where everyone who wants a job can find a job at existing wage rates. A
Skill shortages: Demand exceeds supply; addressed by STEM investment, apprenticeships, immigration policies.
Benefits of a skilled labor force: innovation, reduced recruitment costs, business growth.

Gender Pay Gap is the difference in the average gross earnings of female and male employees due to inequalities that exist in the workplace such as:
The over representation of women in low-paying jobs and the over representation of men in high-paying positions.
Solutions include gender quotas, childcare support, family-friendly policies, mandatory reporting.

Challenges facing the Irish Labour Market is expanding and has become more robust overtime such as and Housing affordability, Youth unemployment and Underemployment.