3.5.2 Supply of labour

• What factors influence the supply of labour?

  • Training period (long training periods act as a barrier to entry).
  • Wages in other occupations.
  • Changes in migration policy (policies that increase net migration increase the supply of labour).
  • Income tax levels
  • Working conditions
  • Trade unions (they can increase the supply of labour to certain industries as workers receive more benefits).
  • Level of welfare benefits.
  • Social trends.
• How does market failure occur in the labour market?

  When workers are unable to easily move between jobs:

  • Geographical immobility of labour
  • Occupational immobility of labour
• What is geographical immobility of labour?

  When workers find it difficult to move from one geographical area to another in order to secure employment. Barriers to mobility may include:

  • Family ties
  • Lack of information about possible jobs in different parts of the country.
  • The challenges in securing/affording accommodation in an unknown location.
• What is occupational mobility of labour?

  the ability of a worker to change occupations when they lose a job.

  • If their skill base is transferable between different occupations, then their occupational mobility is high.
  • In reality, many workers are not able to easily transfer between occupations & which is an issue when an economy is faced with structural unemployment.