interaction of Labour markets

• What are wage differentials?

  Differences in pay for the same job
• Why do workers with a degree earn more over their lifetime?

  They have formal education and qualifications
• How do skills and training affect wages?

  Higher training leads to higher wages
• What has caused the wage gap between skilled and unskilled workers to increase in the UK?

  Technological change and globalisation
• Why do skilled workers demand higher wages?

  They produce higher outputs than unskilled workers
• What factors contribute to the gender wage gap?

  Career breaks and fewer hours worked
• What types of discrimination can affect wages?

  Age, disabilities, gender, and race
• What is monopsony power?

  Only one buyer of labour in the market
• What happens to wages in a monopsony?

  The firm sets lower wages than competitive markets
• What is the marginal cost of adding an extra worker in a monopsony?

  More than the average cost of workers
• What is the profit-maximizing condition for a monopsony?

  MC = MRP at Q2 workers
• How do trade unions help workers in a monopsony?

  They negotiate higher wages and better conditions
• What can happen if trade unions push for excessively high wages?

  Firms may reduce employment or close down
• What is the aim of trade unions regarding marginal revenue product?

  To increase wages to the level of MRP
• What is imperfect information in the labour market?

  Workers unaware of higher paying job opportunities
• What is a bilateral monopoly?

  One buyer and one supplier in the market
• How is labour market equilibrium determined?

  Where supply and demand for labour meet
• What happens to wages during a recession?

  Wage rates typically fall from W to W1
• What is meant by 'sticky wages'?

  Wages do not adjust easily to demand changes
• How does the minimum wage affect wage flexibility?

  It makes wages sticky during recessions
• What is geographical immobility of labour?

  Obstacles preventing labour from moving areas
• What is occupational immobility of labour?

  Obstacles preventing labour from changing occupations
• Why is flexibility important in the labour market?

  It allows labour to respond to market changes
• How do trade unions affect labour market flexibility?

  They can increase or decrease flexibility
• How does regulation impact labour market flexibility?

  Excessive regulation limits flexibility
• How do welfare payments affect labour market flexibility?

  Generous payments lower labour market flexibility
• How does training improve labour market flexibility?

  More training leads to a more skilled workforce
• How can infrastructure improve geographical mobility of labour?

  It makes moving easier for workers
• How does affordable housing affect geographical mobility of labour?

  It allows people to move for work