Summary Economics Labour Market

Supply of Labour

〰
The supply curve shows how much labour a
worker plans to supply at different WR. Labour supply — refers to
There is a positive relationship between the WR the number of people willing
and the SL. and able to work in different
industries and occupations.
As WR rises the quantity of workers attracted to
This includes the
the industry rises- both those that are
unemployed (economically
economically inactive as well as those returning to
active).
an industry (eg nursing).



〰 Economically inactive —
those not in work nor
seeking it. Eg FE students,
housewives, retired,
prisoners




〰 Participation rate — % of
the pop that’s economically
active (UK=75%)
Supply of Labour for the industry




In perfect competition, firm
is a wage taker so the SL
is horizontal.

In a monopsony, the firm is
the wage maker and the
sole employer (eg NHS).
They control wages and
the quantity of labour.




- Individual Supply of Labour
Individuals have a key choice between work and leisure (how to spend time). Leisure is an
opportunity cost of work and work is an opportunity cost of leisure.




Supply of Labour 1