The demand for labour, marginal produvtivity theory

• Supply of labour


  The number of workers willing and able to work at the current wage rate, multiplied by the number of hours they can work
• Factors influencing the supply of labour to a particular occupation

  • Monetary considerations
  • Non-monetary considerations (job satisfaction, working conditions)
• Wage rate


  The upward sloping supply curve shows the proportional relationship between how much the worker is paid and the number of workers willing and able to work
• Demographics of the population

  • The more people there who are able and willing to work, the higher the supply of labour
  • Changes with retirement and school leaving ages, the number of university students and immigration
• Demographic changes


  Shift the supply curve to the right
• Migration


  • Migrants are usually of working age, so the supply of labour at all wage rates tends to increase
  • Migration particularly affects the supply of labour at the lower wage rates, because migrants are usually from economies with average wages lower than the UK minimum wage
• Advantages of work


  • Influences how much people prefer to work
  • Linked to non-monetary advantages (cost of working, childcare, holiday entitlements, promotion potential, job satisfaction, working conditions)
• Leisure time


  • Leisure is a substitute for work
  • People have to choose whether to spend their time on work or leisure
• Factors influencing the choice between work and leisure

  • Age
  • Amount of taxes paid
  • Number of dependents
  • Income from not working
• Trade unions


  • Could attract workers to the labour market by defending employment rights
  • Limits on workers, such as limiting their ability to strike, might cause some people to withdraw from the labour market
• Taxes and benefits


  • If taxes are too high and benefits are too generous, people might be more inclined to withdraw from the labour market
• Training


  • If a lot of training or high qualifications are required for a job, then the supply of labour may fall
  • If the government subsidise training, it is easier for workers to gain the necessary skills for a job, so the supply of labour could increase