Labour Markets

1 The demand for labour

a) Factors that influence the demand for labour to a particular occupation:

• demand for the final product (labour as a derived demand)

• productivity of labour

• price of the product

• wage rate relative to price of capital.

b) Factors that influence the elasticity of demand for labour.

 

2 The supply of labour

a) Factors that influence the supply of labour to a particular occupation:

• size of population • net migration • income tax rates • level of welfare benefits • government regulations • trade unions.

b) Factors that influence the elasticity of supply of labour.

 

3 The determination of wage rates in competitive and non-competitive markets

a) Labour market equilibrium.

b) Causes of changes in the equilibrium wage rate and quantity of labour as a result of shifts in demand curves and supply curves.

c) Wage setting in the public sector/state-owned enterprises.

 

4 Market failure in the labour market

a) Causes and consequences of the geographical immobility of labour.

b) Causes and consequences of the occupational immobility of labour.