The Labour Market (Edexcel IGCSE Economics): Flashcards
Exam code: 4EC1
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Define quality of labour.
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Define quality of labour.
The quality of labour refers to the skills, knowledge and expertise of workers.
Define quantity of labour.
The quantity of labour refers to the number of available workers to a business.
Define education.
Education occurs in schools and universities and may be funded by the government or run by private educational firms.
Define training.
Training is undertaken by firms and shapes the skills and knowledge of human capital and the quality of labour.
Why are labour costs important to a firm?
Labour costs are important because they often represent one of the most significant business costs.
How can a firm lower its labour costs?
A firm can lower its labour costs by increasing the productivity of workers or by reducing wages and salaries.
What is the effect of a higher quality of labour on a business?
A higher quality of labour raises the potential productivity of the business.
How can more skilled workers benefit a business?
More skilled workers can drive innovation, creating a competitive advantage for businesses.
True or False?
Multinational firms may locate near top universities to access highly skilled workers.
True.
Tech multinationals such as Google and Microsoft have located near Paris universities to access highly skilled workers. This raises the quality of labour available to them.
True or False?
The quantity of labour refers to the skills and expertise of workers.
False.
The quantity of labour refers to the number of available workers; skills and expertise describe the quality of labour.
True or False?
Where university education is free, firms benefit from reduced training costs for some specialist workers.
True.
In countries like Sweden and Denmark, free university education means firms face reduced training costs for some specialist workers.
Multinational companies may set up production in countries like Bangladesh or Vietnam due to the large availability at low wages.
Multinational companies may set up production in countries like Bangladesh or Vietnam due to the large labour force availability at low wages.
Some countries invest less in education, which puts the to spend more on education and training.
Some countries invest less in education, which puts the burden on business to spend more on education and training.
Define derived demand.
Derived demand means the demand for labour depends on the demand for the goods and services it helps produce.
Define the labour market.
The labour market is composed of sellers of labour (households) and buyers of labour (firms).
Give an example of the demand for labour being a derived demand.
As the demand for technology devices rises, technology firms demand more skilled labour to design, manufacture and market the products.
What happens to the demand for labour if demand for goods and services increases?
If demand for goods and services increases, the demand for labour will also increase, because labour demand is derived.
What is the relationship between the wage rate and the quantity of labour demanded?
There is an inverse relationship: as the wage rate rises, the quantity of labour demanded falls.
What causes a movement along the demand curve for labour?
A change in the wage rate alone causes a movement along the demand curve for labour.
How does an increase in the selling price of a product affect the demand for labour?
A higher selling price incentivises the firm to supply more, so the demand for labour increases and the curve shifts right.
How does substituting capital for labour affect labour demand?
If capital (machinery) is more cost effective, the demand for labour decreases and the demand curve shifts left.
True or False?
A shift of the labour demand curve to the right means more workers are employed at each wage rate.
True.
A rightward shift means more workers are employed at each wage rate.
True or False?
A change in the wage rate alone shifts the entire demand curve for labour.
False.
A change in the wage rate alone causes a movement along the curve; other factors shift the whole curve.
True or False?
Clothing manufacturers in Bangladesh and Vietnam have invested in automated production to reduce their demand for labour.
True.
By substituting capital for labour, these firms reduce their demand for labour and save on labour costs. The labour demand curve shifts left.
An increase in online shopping caused a rightward in the demand for labour to deliver goods.
An increase in online shopping caused a rightward shift in the demand for labour to deliver goods.
When an economy is in a , demand for most goods and services falls and the demand for labour decreases.
When an economy is in a recession, demand for most goods and services falls and the demand for labour decreases.
Define the supply curve for labour.
The supply curve for labour shows the relationship between the wage rate and the number of workers willing to work in an occupation.
Define geographical mobility of labour.
Geographical mobility of labour is the ease with which workers can move from one geographical area to another to secure employment.
Define occupational mobility of labour.
Occupational mobility of labour is the ability of a worker to change occupations when they lose a job.
What is the relationship between the wage rate and the supply of labour?
There is a positive relationship: the higher the wage rate, the greater the supply of labour in that occupation.
How do skills and qualifications affect the supply of labour?
A greater number of relevant graduates increases the supply of labour to specific industries. For example, more medical graduates raise the supply of nurses and doctors.
How does a larger population affect the supply of labour?
A larger population means more people are available for work, increasing the supply of labour.
How can net migration affect the supply of labour?
Policies that increase the net migration rate increase the supply of labour to certain industries.
What is meant by the participation rate?
The participation rate is the number of people willing to work within the working age group.
True or False?
A youthful population tends to reduce the supply of labour.
False.
A more youthful population, common in less developed countries, increases the supply of labour; an ageing population reduces it.
True or False?
Raising the school leaving age tends to decrease the supply of labour.
True.
A rise in the school leaving age keeps young people out of work, reducing the supply of labour.
True or False?
A shrinking population would lead to a decrease in the supply of labour.
True.
A fall in population reduces the number of people available to work, decreasing the supply of labour.
India's growing population has led to a rightward in the supply of labour.
India's growing population has led to a rightward shift in the supply of labour.
If a worker's skill base is between occupations, their occupational mobility is high.
If a worker's skill base is transferable between occupations, their occupational mobility is high.
Define labour market equilibrium.
Labour market equilibrium occurs when the demand for labour equals the supply of labour.
Define a price taker in the labour market.
A price taker is a firm that must accept the wage rate being paid to workers in the industry.
In the labour market, who demands labour and who supplies it?
Firms demand labour in order to produce output, while workers (households) supply their labour.
What happens if a firm offers a wage below the market rate?
If a firm offers a lower wage, it will likely struggle to recruit workers.
What happens if a firm offers a wage above the market rate?
If a firm offers a higher wage, there will be an excess supply of workers applying to work there.
How does a rise in the demand for labour affect the equilibrium wage and quantity?
A rise in the demand for labour increases both the equilibrium wage rate and the quantity of labour employed.
How does a fall in the supply of labour affect the equilibrium wage and quantity?
A fall in the supply of labour raises the equilibrium wage rate but reduces the quantity of labour employed.
Which way does the demand curve shift when demand for labour rises?
When demand for labour rises, the demand curve shifts to the right.
True or False?
A fall in the supply of labour to an industry can be caused by workers switching to other occupations.
True.
When workers move to different occupations, the supply of labour to the original industry falls. For example, graphic designers switching jobs reduces supply in that industry.
True or False?
An individual firm in a competitive labour market can set its own wage rate.
False.
An individual firm is a price taker and must accept the wage rate paid across the industry.
A rise in the demand for websites causes a rise in the demand for graphic designers, an example of demand.
A rise in the demand for websites causes a rise in the demand for graphic designers, an example of derived demand.
A fall in the supply of labour shifts the labour supply curve to the .
A fall in the supply of labour shifts the labour supply curve to the left.
Define trade union.
A trade union is an organisation that represents the interests of its workers in negotiations with a firm's management or owners.
Define collective bargaining.
Collective bargaining is when a trade union negotiates with employers on behalf of all its members, for example over wages and conditions.
Define industrial action.
Industrial action refers to methods such as strikes and overtime bans used to force employers or governments to keep engaging with a union.
Besides pay, name two interests that a trade union represents on behalf of workers.
Trade unions also represent workers' health and safety at work and the reduction of discrimination and exploitation.
What is a subscription in the context of trade unions?
A subscription is the monthly fee workers pay to join a trade union; membership ends when they stop paying it.
Which type of union represents workers in the same industry regardless of skill or seniority?
An industrial union represents workers in the same industry, whatever their skill level or seniority.
Which type of union represents professional office-based workers?
A white collar union represents professional office-based workers, such as financial advisors and teachers.
How can collective bargaining affect wages?
Through collective bargaining, workers have the power to increase wages above the level they could negotiate individually.
Name two examples of industrial action a trade union can take.
Examples of industrial action include strikes and overtime bans (also work to rule and go-slows).
True or False?
A general union can be joined by skilled and unskilled workers in any industry.
True.
A general union represents skilled and unskilled workers in any industry, such as truck drivers and musicians.
True or False?
Trade union intervention leaves equilibrium wages and employment unchanged.
False.
Trade union intervention changes the equilibrium wages and employment in the labour market.
As well as collective bargaining, trade union members benefit from legal in disputes.
As well as collective bargaining, trade union members benefit from legal representation in disputes.
Trade unions negotiate with government on the creation and maintenance of levels.
Trade unions negotiate with government on the creation and maintenance of minimum wage levels.
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