Labour Economics

Topics: Supply and demand, Employment, Wage Pages: 20 (3929 words) Published: March 27, 2013
Chapter 2: Factors affecting Supply of labour
Use diagrams
Chapter 4&5: wages, unions perfectly competitive markets, imperfect market, bargaining Be able to compare competitive and imperfect
Chapter 6: productivity
Will not include flexibility
Chapter 7: Globalization
Chapter 8: types, tlfp, pr, unemployment programmes
Chapter 9: criticisms of hct
Chapter 10: inequalities

3 Questions
1 compulsory, choose 1 of 2
50 marks each

Chapter 2: Factors affecting supply of Labour.
EAP- Economically active population. = total labour Force.
Determinants Of labour Supply
* Person’s decision to work and not how many hours to work. * Population Size
* Fertility Rates.
* Mortality Rates
* Net Migration Flows
* Quantity and quality
Labour Force Participation Rate:
The Proportion of the population that works or is willing to work. LFPR is the percentage of the population of working age that furnishes their labour for production of economic goods and ser vices whether employed or not. Female LFPR

Reasons for increasing Female LFP
* Rising wage rates due to reduced discrimination
* Rising levels of education among women have increased employment opportunities and earnings for women. * Declining Birth Rates
* Decreasing proportion of women living with employed men.

Population and Population Growth:
Labour force is related to population Size. Generally, the greater the population size, the greater the size of the labour force. Population Growth normally affects the labour supply with a lagged effect; the length of the lag is dependent on the reasons for population growth. * Population size is largely determined by age and sex distributions * Population size is also determined by history of fertility, mortality and migration patterns. * A link Exists between the LFP and the population size/growth * Because population size and growth affect labour supply, LFPR is also affected by population growth and size.

The industry Labour supply curve
* The Labour supply curve for an industry will be upward sloping. * This is because, as wages rise, other workers enter the industry attracted by the higher rewards incentive. * The may have moved from other industries or they may not have previously held a job, such as housewives or the unemployed. * The extent to which a rise in the prevailing wage or salary in an occupation leads to an expansion in the supply of labour depends on the elasticity of labour supply Factors Affecting Labour Supply:

The supply of labour to a particular occupation is influenced by a range of monetary factors: * The real wage rate- Higher wages normally boost the number of people willing to work * Barriers to entry- artificial limits to an industry’s labour supply (eg through intro of minimum entry requirements or other legal entry barriers) can restrict labour supply and force average pay and salary levels higher – this is particularly the case in professions such as legal services and medicine where there are a strict “entry criteria” to the professions. Indeed these labour market barriers are partly designed to keep pay levels high as well as being methods of maintaining the quality of people entering those professions. * Improvements in the occupational mobility of labour: eg if more people are trained with the necessary skills required in a particular occupation. * Non-monetary characteristics of specific jobs: these can be Important- they include factors such as level of risk associated with different jobs, the requiem to work anti-social hours. * Wage differentials in part act as a compensation for people who have to work anti-social hours or who are exposed to different degrees of risk at work, both in the short term and the long term. Some jobs require a wage-rate that encompasses this risk premium. Elasticity of labour supply:

The elasticity of labour supply to an occupation measures the extent to...
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