T3TE

• The labour market is where employment is agreed between workers (who supply their labour) and employers (who demand labour)
• the demand for labour is the Q of labour that firms are W/A to employ at different wage rates at a given time
• Non-price factors for labour demand (PPD) is P of substitutes, productivity of labour and derived demand
• marginal productivity theory means the D for labour depends on balancing the revenue that a firm gains from employing an extra unit of labour against the marginal cost of a unit
• derived demand means that the demand for labour is dependent on D for the final g/s that the workers produce
• derived D for labour is dependent on demand for the final g/s that they produce
• Price elasticity of demand for labour is how responsive the Q demanded of labour will be to changes in wages
• PED for labour depends on the proportion of labour cost in the total cost of a business, ease and cost of factor substitution time period under consideration and the PED of final Q produced by a business
• Supply of Labour is the quantity of workers that are W/A to offer their services at any given wage rate in a given period of time
• wage rate is the opportunity cost of leisure, therefore an increase in wages will encourage workers to substitute work for leisure
• Non-Price factors affecting supply (SUBMIT): skills, unions, benefits, migration, income tax and benefits, Trends
• Trade unions (TU) - an organisation of workers required by membership fees which aims to further the interests of its members e.g working conditions
• Non-pecuniary benefits: advantages for workers in a particular job which make them more willing to accept the work
• Non-price factors affecting PES (GOUT): Geo mobility, Occupational mobility, Unemployment level, Time
• Labour immobility: when workers cannot move into alternate employment in other regions or other occupations
• Geographical immobility: workers being unable to move to different places to seek and find work
• occupational immobility: workers being unable to move between jobs as they lack the appropriate skill or training
• Active workforce: (unemployed and employed) of working age who are actively seeking work
• cyclical unemployment arises during the downturn of the economic cycle e.g. recession
• Demand-deficient unemployment: unemployment arising because of deficiency of AD in the economy, equilibrium level of Q is below full employment
• discouraged workers: people who have been unable to find employment and no longer looking for work
• economically inactive: people of working age not looking for work for any reason
• employed: people working for firms/organisations/self employed
• frictional unemployment: unemployment associated with job search (between jobs)
• hysteresis: unemployment causing unemployment
• ILO unemployment rate: measure of the % of workforce who are unemployed, but available for work/looking for
• seasonal unemployment: unemployment that arises in seasons of the year when demand is low
• structural unemployment: unemployment arising because of changes in the pattern of economic activity within the economy
• underemployment: when an individual is employed in a 2nd choice occupation/only able work part-time but would like to work full time
• unemployment rate= number of unemployed / labour force x 100
• minimum wage: a government-set lowest rate below which firms are not allowed to pay workers
• the minimum wage is intended to protect workers, improve incentives and reduce poverty
• maximum wage: a ceiling on how much an individual can earn in a specific time period
• policies to tackle labour market immobility (TRIT): Training, Relocation subsidies, Info provision, Trade union reform