1.2.22 The Labour Market

• What are the Factors affecting the Demand for Labour? (4)

  Demand for the product

  Availability of substitutes

  Productivity of labour

  Other employment costs
• How does demand for a product affect the demand for Labour?

  because demand for labour is derived demand
• derived demand


  demand that arises because there is demand for another good
• How does the availability of substitutes affect the demand for labour?

  The demand for labour can be affected by cost and availability of substitutes for labour
• How does productivity of Labour affect the demand for labour?

  If every worker is able to produce more output, the demand for labour would increase, because production becomes more profitable and efficient
• How do other employment costs affect the demand for labour?

  The other costs affect a cost to the employment
• What are the factors affecting the supply of Labour? (8)


  Population size

  Migration

  Age distribution of the population

  Retirement age

  School leaving age

  Female participation

  Skills and Qualifications

  Labour Mobility
• How does population affect the supply of labour?

  More population -> more supply of labour
• How does migration affect the supply of Labour?

  More people -> More supply of labour
• How does age distribution of the population affect the population?

  An 'aging population' means that the number of people over the age of 65 is increasing in the population, meaning that the dependency ratio is also increasing which can place a financial burden on the population
• How does the retirement age affect the supply of labour?

  Many countries are increasing the retirement age, meaning the supply of labour increases
• How does school leaving age affect the supply of labour?

  If a country increases school leaving age, this would decrease the supply of labour
• How does female participation affect the supply of Labour?

  more women have chosen to enter the workforce due to cultural, societal and feminist legislative change, increasing the supply of labour
• How do skills and qualifications affect the supply of labour?

  supply of labour increases if people are more qualified
• How does labour mobility affect the supply of labour?(2)

  Geographically mobile: workers can move to a different region to find work, increasing supply of labour

  occupationally mobile: workers can switch job types easily, increasing supply of labour
• what is the wage rate determined by?

  the interaction of the demand and supply of labour