Supply of labour = quantity of labour supplied at a given wage rate
Factors affecting elasticity of MRP (demand for labour)
Substitutes for labour (capital)
Elasticity of demand for final product
Cost of labour proportional to total costs
Time period
Influences on supply of labour
1. non monetary (wage) factors (perks of the job)
- if non wage factors are appealing = increased supply of labour at each wage
rate
- BUT, intense overseas competition means there is insufficient
resources to supply non-wage factors for workers as these would
increase production labour costs and thus reduce firms’ profit
2. opportunities for promotion
- = greater job security + stronger future streams of income = increased supply
of labour
- BUT, extent to which there is strong job security depends on sector
(e,g little job security in car manufacturing due replacing human
capital with machinery/robots)
Geographical mobility of labour: ability of labour to take available work in different
areas/regions
- e,g decreased regional house price differences = easier to afford so less expensive /
can purchase property in different areas they move in (e,g northern workers find it
easier to move to London)
- e,g infrastructure: fall in rail and bus fares = ability to to travel to and from work as
cheaper
- family ties / imperfect job market knowledge of available jobs (asymmetric
information) / transport costs
- can improve market information via increasing funding for Job Centres (more
staffing/improved location/relocation grants)
Factors affecting elasticity of MRP (demand for labour)
Substitutes for labour (capital)
Elasticity of demand for final product
Cost of labour proportional to total costs
Time period
Influences on supply of labour
1. non monetary (wage) factors (perks of the job)
- if non wage factors are appealing = increased supply of labour at each wage
rate
- BUT, intense overseas competition means there is insufficient
resources to supply non-wage factors for workers as these would
increase production labour costs and thus reduce firms’ profit
2. opportunities for promotion
- = greater job security + stronger future streams of income = increased supply
of labour
- BUT, extent to which there is strong job security depends on sector
(e,g little job security in car manufacturing due replacing human
capital with machinery/robots)
Geographical mobility of labour: ability of labour to take available work in different
areas/regions
- e,g decreased regional house price differences = easier to afford so less expensive /
can purchase property in different areas they move in (e,g northern workers find it
easier to move to London)
- e,g infrastructure: fall in rail and bus fares = ability to to travel to and from work as
cheaper
- family ties / imperfect job market knowledge of available jobs (asymmetric
information) / transport costs
- can improve market information via increasing funding for Job Centres (more
staffing/improved location/relocation grants)
