Share Demand for and supply of labour
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What is meant by the demand for labour?
The number of workers firms are willing and able to hire at different wage rates.
What is meant by the supply of labour?
The number of workers willing and able to work at different wage rates.
What usually happens if wages increase?
Demand for labour decreases, supply of labour increases.
Give two factors that can increase the demand for labour.
Higher demand for products / economic growth / increased productivity.
Give two factors that can decrease the demand for labour.
Recession / automation / lower demand for products.
What is meant by derived demand?
Demand for labour depends on demand for the goods and services workers produce.
Why may highly skilled workers earn higher wages?
Their skills are scarce and more productive.
What is the equilibrium wage rate?
The wage where demand for labour equals supply of labour.
What happens if wages are above equilibrium?
Labour surplus/unemployment.
What happens if wages are below equilibrium?
Labour shortage.
Using a DL and SL diagram, show an effect of a better education on the labour market.
Using a DL and SL diagram, show an effect of an increased immigration on the labour market.
Why might firms reduce labour demand after introducing machines?
Machines can replace workers.
Using a DL and SL diagram, show an effect of an increased automation on the labour market.
Using a DL and SL diagram, show an effect of worsening working conditions on the labour market.
Give one non-financial factor affecting labour supply.
Working conditions / job satisfaction / flexible hours.
