Supply of labour

• What does the supply of labour refer to?

  The number of hours workers supply at a wage
• How is wage elasticity of supply of labour defined?

  Responsiveness of labour supply to wage changes
• How is wage elasticity of supply of labour calculated?

  Using the formula %ΔSL ÷ %ΔW
• What is economic rent?

  Payment above what keeps production in use
• What are transfer earnings?

  Minimum payment to keep a factor in use
• In the context of labour, what do transfer earnings refer to?

  The minimum amount to keep a worker employed
• What are the factors affecting the supply of labour to an industry?

  • Wage
  • Wages in other industries
  • Non-monetary benefits
  • Qualifications and skills needed
  • Demographics
  • Size of working population
• How does the supply of labour behave in the short run?

  It is likely to be inelastic
• What factors affect the wage elasticity of the supply of labour?

  • Availability of workers
  • Skills & qualifications
  • Nature of the job
  • Labour immobility
  • Time period (more elastic in the long run)
• Why is the supply of labour inelastic in the short run?

  Most jobs require training or qualifications
• How does the supply of labour behave in the long run?

  It is likely to be more elastic
• Why is the supply of labour more elastic in the long run?

  More people can gain training or qualifications
• What does a diagram illustrating economic rent and transfer earnings include?

  • Economic rent
  • Transfer earnings
  • Wage rate
  • Quantity of labour
  • Supply curve (S)
  • Demand curve (D)