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Chapter 22 The Labour Market

The document discusses the labour market, including the demand and supply of labour. It explains how the demand and supply curves for labour are determined by factors such as wages, productivity, population size, and education. It also covers how wages are determined by the interaction of labour demand and supply.

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Eranga Lakmali
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93 views8 pages

Chapter 22 The Labour Market

The document discusses the labour market, including the demand and supply of labour. It explains how the demand and supply curves for labour are determined by factors such as wages, productivity, population size, and education. It also covers how wages are determined by the interaction of labour demand and supply.

Uploaded by

Eranga Lakmali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 22:LABOUR MARKET

*THIS IS A PLACE WHERE WORKERS AND EMPLOYERS GET


TOGETHER AND TALK WITH EACH OTHER
*IN THE LABOUR MARKET EMPLOYERS START TO
COMPETE WITH EACH OTHER INORDER TO HIRE THE
BEST WORKER AND THE WORKERS COMPETE TO GET
THE SATISFING JOB THEY WANT
*THEIR ARE 2 TYPES OF LABOUR IN THE MARKET
*DEMAND FOR LABOUR-THESE ORE THE BUYERS
*SUPPLY OF LABOUR- THESE ARE THE SELLERS
DEMAND CURVE FOR LABOUR
*THE DEMAND CURVE REPRESENTS THE QTY OF LABOUR
EMPLOYERS NEED TO HIRE AT ANY GIVEN WAGE RATE
*WAGE RATE IS THE AMOUNT OF MONEY GIVEN TO A
WORKER FOR A SERVICE THEY HAVE PROVIDED
PRICE OF LABOUR = WAGE RATE

*SIMPLY WAGE RATE IS MONEY GIVEN TO A WORKER FOR


THE SERVICES THEY HAVE PROVIDED
*THE LABOUR DEMAND CURVE WILL SLOP DOWN FROM
LEFT TO RIGHRT BECAUSE WAGE , RATE AND THE
DEMAND FOR LABOUR HAS A NEGATIVE RELATIONSHIP
WAGE INCREASE = DEMAND FOR LABOUR REDUCE
WAGE DECREASES = DEMAND FOR LABOUR INCREASE
*WHEN WAGE RISES FIRM WILL HIRE FEW WORKERS
BECAUSE OF THE LABOUR COST RISES
*WHEN WAGE DECLINE FIRMS WILL HIRE MORE
WORKERS BECAUSE THE LABOUR COST DECLINES

*WHEN THE WAGE RATE INCREASES LEADING TO THE


INCREASE IN THE LABOUR COST THEN THE OVERALL
COST OF PRODUCTION WILL INCREASE
*WHEN THE POPULATION OF A COUNTRY DECREASES
THEN THE LABOUR COST WILL ALSO DECREASE
THEREFORE THE PRODUCTION COST WILL ALSO
DECREASE
FACTORS AFFECTING DEMAND FOR LABOUR
1)DEMAND FOR THE PRODUCT
*WHEN THE DEMAND FOR A PRODUCT RISES THEN THE
DEMAND FOR LABOUR WILL INCREASE
2)AVAILABILITY OF SUBSTITUTES
*WHEN THE AVAILABILITY OF SUBSTITUTES LIKE
MACHINERY INCREASES THEN THE DEMAND FOR
LABOUR INCREASES
3)PRODUCTIVITY OF LABOUR
*WHEN THE PRODUCTIVITY OF WORKERS INCREASES THE
OUTPUT LEVEL AND THE PROFITABILITY LEVEL WILL
INCREASE LEADING TO CREATING MORE OUTPUT
BECAUSE IT IS PROFITABLE AND BECAUSE OF THAT THE
FIRM NEEDS TO HIRE MORE WORKERS TO MANAGE THE
PRODUCTION OF EXTRA OUTPUT THEREFORE THERE
WILL BE AN INCREASE IN DEMAND FOR LABOUR
4)OTHER EMPLOYMENT COST
*WHEN THE DEMAND FOR AIR TRAVEL INCREASES THEN
THE DEMAND FOR THE CABIN STAFF WILL INCREASE
LEADING TO A RIGHTWORD SHIFT IN THE DEMAND
CURVE FOR CABIN STAFF
THE SUPPLY CURVE FOR LABOUR
*THIS IS A GRAPHICAL REPRESENTATION OF THE TIME
THAT A WORKER IS WILLING TO SACRIFICE TO EARN A
CERTAIN AMOUNT OF WAGE LEVEL
*THE SUPPLY CURVE SLOPS UPWORDS FROM LEFT TO
RIGHT BECAUSE WAGE AND QTY SUPPLIED HAS A
POSSITIVE RELATIONSHIP

*WHEN WAGE INCREASES THE QTY OF THE LABOUR


SUPPLIED WILL INCREASE
*WHEN WAGE DECREASES THE QTY OF THE LABOUR
SUPPLIED WILL DECREASE
FACTORS AFFECTING THE SUPPLY OF LABOUR
1)POPULATION SIZE
*WHEN THE POPULATION SIZE INCREASES MORE PEOPLE
WILL BE AVAILABLE FOR WORK IN THE SOCIETY LEADING
TO AN INCREASE IN SUPPLY OF LABOUR
2)MIGRATION
*WHEN MIGRATION INCREASES THE SUPPLY OF LABOUR
INCREASES
3)AGE DISTRIBUTION OF POPULATION
*THIS IS WHERE THE PEOPLE IN THE SOCIETY ARE
SEPARETED INTO DIFFERENT AGE GROUPS
4)RETIREMENT AGE
*WHEN THE RETIREMENT AGE INCREASES THEN PROPLE
WHO WERE CLOSSING TO THEIR RETIREMENT AGE NEED
TO WORK FOR SOME MORE COUPLE OF YEARS LEADING
TO AN INCREASE IN SUPPLY OF LABOUR
5)SCHOOL LEAVING AGE
*WHEN THE SCHOOL LEAVING AGE INCREASE FROM 18
TO 20 THEIR WILL BE A DELAY OF TWO YEARS IN THE
NEW WORK FORCE THEREFORE LEADING FOR THE
SUPPLY OF LABOUR TO INCREASE
6)FEMALE PARTICIPATION
*WHEN THE NUMBER OF WOMEN ENTERING THE
LABOUR FORCE INCREASES THE SUPPLY OF LABOUR WILL
ALSO INCREASE
7)SKILLS AND QUALIFICATIONS
*WHEN THE SKILLS AND QUALIFICATIONS OF A PERSON
INCREASES HE OR SHE CAN GET EMPLOYEED EASILY
LEADING TO A INCREASE IN SUPPLY OF LABOUR
8)LABOUR MOBILITY
*THIS IS WHERE THE WORKERS CAN MOVE
GEOGRAPHICALLY AND OCCUPATIONALY BETWEEN JOBS
*GEOGRAPHICAL MOBILITY - THIS IS WHERE THE
WORKERS CAN MOVE FROM ONE AREA TO ANOTHER
*OCCUPATIONAL MOBILITY - THIS IS WHERE THE
WORKERS CAN SHIFT FROM ONE JOB TO ANOTHER
WAGE DETERMINATION
*THIS IS SHOWN BY THE INTERACTION OF THE DEMAND
AND SUPPLY FOR LABOUR
WAGE RATE =DEMAND OF LABOUR =SUPPLY OF LABOUR
IMPORTANCE OF THE QUANTITY AND QUALITY OF
LABOUR TO A BUSINESS
*WHEN A FIRM IS FINDING A LOCATION FOR ITS
OPERATIONS WHEN CHOSING WE NEED TO CONSIDER
THE QUANTITY AND QUALITY OF HUMAN CAPITAL
*WHEN LABOUR MOBILITY INCREASES THEN THE SUPPLY
OF LABOUR INCREASES
*WHEN THERE ARE MANY TRANSPORT NETWORKS THE
GEOGRAPHICAL MOBILITY OF LABOUR WILL INCREASE
*ANY CHANGES WILL MAKE A CHANGE IN TH SUPPLY OF
LABOUR
*WHEN IMMIGRATION INCREASES THE SUPPLY OF
LABOUR WILL INCREASE LEADING TO THE SUPPLY
LABOUR CURVE TO SHIFT RIGHTWORDS
*AND WHEN DECIDING THE LOCATION WE NEED TO
CONSIDER IF THERE ARE ENOUGH WORKERS NEAR THE
LOCATION CHOOSEN INORDER TO CONTINUE FUTHER
PLANS
IMPACT OF EDUCATION AND TRAINING ON THE
QUANTITY OF HUMAN CAPITAL
*WHEN EDUCATION AND TRAINING GIVEN TO A
EMPLOYEE IS INCREASED THE QUANTITY OF HUMAN
CAPITAL AND LABOUR WILL INCREASE
*THERE ARE 2 FACTORS THAT NEED TO BE CONSIDERED
WHEN CHOOSING HOW MANY WORKERS TO HIRE
1)PRICE OF LABOUR
2)QUANTITY OF LABOUR
*THE EMPLOYERS RECRUIT PEOPLE WITH THE ABILITY TO
READ AND WRITE AND GOOD COMMUNICATION SKILLS
LIKE SPECIALIST SKILLS
*WHEN TRAINING INCREASES THE WORKERS SKILLS AND
THE PRODUCTIVITY AND THE WORKERS MOTIVATION
WILL INCREASE

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