Labour markets and wages
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Lektionsnotizen
Demand for labour
- Labour demand is work employers are willing and able to hire at a wage in a period. It is derived from output demand and affected by productivity and other inputs. In the simple competitive model a wage change moves along demand, while output demand or technology changes can shift it.
- Fictional W = 20 − 0.1L and supply W = 4 + 0.1L meet at L80/W12. Labour is measured as workers here, not hours; the wage is hourly. The model is not a claim about a current UK pay rate. Automation may substitute for some tasks and complement others, while expansion can offset displaced tasks.
A fictional competitive labour market
Supply of labour
- Labour supply is work people are willing and able to offer at a wage over a period. State whether it measures workers or hours. Skills, conditions, available population, migration, transport, housing and household circumstances can change it.
- In the specified model a wage change alone is a movement along the supply curve, whereas non-wage changes shift it. Market supply is often modelled upward sloping; individual hour choices need not always move in that direction. Commuting costs can matter, so they should not be dismissed as irrelevant.
Movement or labour-supply shift?
Wage determination
- Equilibrium in a simple competitive model equates labour quantities demanded and supplied. Actual wage-setting can also involve public pay systems, collective bargaining and employer market power. Skills, productivity, training barriers, conditions and discrimination can affect differences.
- Compare like hours and gross/net or nominal/real measures. A doctor-versus-retail comparison may involve training barriers and employer demand, but neither role’s pay measures its social worth or proves an individual’s ability. Risk and unpleasant conditions may attract compensation only where labour-market conditions support it.
Explain a possible wage difference
Minimum wage
- Statutory minimum pay can raise hourly earnings for affected eligible workers if binding and complied with. Applicable UK rates depend on age and apprenticeship rules; the statutory National Living Wage differs from voluntary living-wage schemes. Use current official information for exact rates.
- Fictional competitive floor W14 gives labour demand 60 and supply 100, excess supply 40. This is not a prediction that every wage-floor rise cuts jobs: firms may adjust productivity, margins, prices, hours or hiring, and employer market power can alter the effect. Poverty also depends on household income, hours and costs.
A fictional binding wage floor
Trade unions
- Unions represent workers and can negotiate pay, hours and conditions for a defined bargaining group under the relevant arrangements. Worker voice and communication may improve, while outcomes depend on representation, leverage and agreement.
- Strikes withdraw participating labour and may disrupt operations; they do not always stop all production. Costs and benefits affect workers, firms and others. Labour alternatives, scarce skills and product demand shape bargaining power, so a high aggregate unemployment rate does not alone prove workers are replaceable.
Collective bargaining and worker voice
Labour mobility
- Occupational mobility is the ability to change types of work, affected by training, accreditation and transferable skills. Geographical mobility is the ability to take work in another place, potentially using relocation, commuting or suitable remote work. Housing, transport, caring responsibilities and information influence feasibility.
- England apprenticeships combine paid employment with relevant training and study; other UK nations have their own arrangements. Official unemployment concerns being without work while actively seeking and available, with rules for those waiting to start an arranged job. A student can satisfy the definition, and someone without a job is not automatically unemployed.
Mobility is more than willingness
Gross, net and real pay
- Gross pay is remuneration before relevant deductions; net pay deducts the stated amounts. Fictional 30 hours × £15 = £450 gross; less £70 given deductions leaves £380 net. Do not invent current tax or National Insurance bands when the deductions are supplied.
- An hourly rate differs from weekly earnings if hours differ, and nominal pay differs from purchasing power. Use the relevant price measure for real-pay comparisons and keep periods, units and assumptions consistent.
Fictional weekly pay calculation
Folien
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Übungsfragen
Gratis-Vorschau — 8 von 34 Fragen. Registriere dich, um alle zu sehen.
1.What is the demand for labour?
Easy- Awork employers are willing and able to hire at a wage in a period
- Bworkers' desire for jobs
- Cthe wage
- Dunemployment
2.What is the supply of labour?
Easy- Afirms' demand
- Bthe wage
- Cprofit
- Dwork people are willing and able to offer at a wage in a period
3.What is a wage?
Easy- Apayment for capital
- Bprofit
- Cpayment for labour
- Dpayment for land
4.What is the National Minimum Wage?
Easy- Aa benefit
- Ba legal minimum hourly rate
- Ca maximum wage
- Da tax
5.What is a trade union?
Easy- Aan organisation representing workers
- Ba firm
- Ca tax
- Da bank
6.Why might skilled jobs pay more?
Easy- Askills are common
- Bjobs are easy
- Cworkers are free
- Dskills are scarce
7.Why might risky jobs pay more?
Easy- Athey are easy
- Bthere is no reason
- Ccompensation for danger
- Dthey are safe
8.What is collective bargaining?
Easy- Atax
- Bunion negotiation with employers
- Cindividual pay talks
- Dprice fixing
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