what factors influence the supply of labour to a particular occupation

Factors that affect the supply of labour include:

• Pay and remuneration;
• Working conditions;
• Human capital, skills, experience and education and training levels;
• Occupational and geographical mobility of labour; and
• The participation rate.

Full Answer

What are 5 factors that affect the labor market?

Relevant measures include unemployment, productivity, participation rates, total income, and gross domestic product (GDP).

What are the 3 determinants of labor supply?

Answer and Explanation:Population: The total population refers to the supply of labor. ... Wage rate: The wage rates are the main factor influencing the labor supply in the market. ... Net benefits of work: The benefits of work also impact the labor supply because it defines what the labor will get in return.More items...

How can a government influence the supply of labour?

Income taxes, consumption taxes, and income-based transfer programs cause a substantial downward distortion of labor supply.

What influences the supply of labour in an Organisation?

The supply of labour is considered on the basis of population, different age groups, participation of sex ratio and their education. Supply of labour is related with that quantity and rate at which the labourers are ready to work.

What are the factors that affect labour?

Both the demographic composition of the population and the relationship between each demographic factor and labor force participation can change over time.Sex. ... Birth Cohort. ... Education. ... Race and Ethnicity. ... Disability. ... Marital Status. ... Presence of Young Children at Home.

What are the 4 factors affecting the demand for labor?

There are four main determinants of the elasticity of demand for labour:The availability of substitutes.The elasticity of demand for the products.The proportion of labour cost.The elasticity of supply of substitutes inputs.

What are two factors that can influence the productivity of Labour?

5 factors with an impact on labor productivityEnergy and personal attitudes. The combination of energy and a person's attitude will play a significant role in determining their productivity in any context, whether work-related or not. ... Equipment and resources. ... Objectives. ... Leadership. ... Environment.

What factors affect the supply of labour in Nigeria?

(i) Size of population of a country: The larger the population, the greater the labour force. (ii) Official school-leaving age: If the leaving age is low, the proportion of labour force will be high. (iii) Retirement age: The age of exit in public employment will determine the labour force.

What determines labor supply?

At any point in time, the economywide labor supply is given by adding the work choices made by each person in the population. Total labor supply also depends on the fertility decisions made by earlier generations (which determine the size of the current population).

What are the determinants of labor demand?

The factors that affect the demand for labour are:labor productivity.changes in technology.changes in the number of firms.changes in demand for a firm's product.firm profitability.

What are the determinants of the supply and demand for labour?

Supply of labor is affected by preferences, income, expectations, prices of goods and services, and population. Demand of labor is affected by product preferences, technology, and factors of production costs.

What are the determinants of demand?

The 5 Determinants of Demand The price of the good or service. The income of buyers. The prices of related goods or services—either complementary and purchased along with a particular item, or substitutes bought instead of a product. The tastes or preferences of consumers will drive demand.

What are the effects of the previous factors on the supply of labour?

The effect of the previous factors affecting the supply of labour can be seen on the diagram above. An increase in the supply of labour (S1 to S2) will cause an increase in the quantity of workers from Q1 to Q2 and a decrease in the supply of labour (S1 to S3) will cause a decrease in the quantity of workers from Q1 to Q3.

What happens to the labor supply in substitute occupations?

In doing so, the labour supply for that occupation will decrease.

How does the wage increase affect leisure time?

As an individual’s wage increases, so does the opportunity cost of leisure time. For example, before the wage rise, one hour of leisure time spent could have been instead used to earn £10 of money from working. However, after the wage rise, one hour of leisure time now comes at an opportunity cost of £15, which could have been earned if the individual chose instead to work in that one hour instead of fill it with leisure activities. As a result of this, the increased opportunity cost will incentivize the individual to increase the time they spend at work and therefore reduce their time spent on leisure activities.

Why is occupational immobility important?

Occupational immobility of labour often occurs during structural changes to the economy for example, the shift in the economy from manufacturing to services led to large amounts of unemployment during the transition period. This is due to the fact that many people working in the manufacturing industry lacked the skills required to transition into service sector jobs. As a result of this, the jobs that do require labour with higher skill sets offer a higher wage. This is due to the lack of supply for higher skilled jobs e.g. those in which more qualifications are required.

Why do people work overtime?

This is especially the case for those looking to have some extra income which can be achieved through longer working hours. As such those occupations offering overtime are likely to see an increase in the supply of labour available to them.

What happens if there is an increase in the value of lesuire time?

If there is an increase in the value of lesuire time then workers are likely to reduce the number of hours or days that they work. As such, firms will see a decrease in the supply of labour available to them.

What happens if there are high barriers to entry for a certain occupation?

If there are high barriers to entry for a certain occupation, then the supply of labour for that occupation will decrease. The barriers to entry can be in the form of minimum qualification requirements or university degrees etc. These requirements remove a large percentage of the population from applying for the job as they’re less likely to be eligible.

What is labour supply?

The labour supply is the number of hours people are willing and able to supply at a given wage rate. It is the number of workers willing and able to work in a particular job or industry for a given wage. The labour supply curve for any industry or occupation will be upward sloping.

Why is the labour supply curve upward sloping?

This is because, as wages rise, other workers enter this industry attracted by the incentive of higher rewards. They may have moved from other industries or they may not have previously held a job, such as housewives or the unemployed.

What is a substitute occupation?

Substitute occupations: The real wage rate on offer in competing jobs affects the wage and earnings differential that exists between two or more occupations. For example an increase in the earnings available to trained plumbers and electricians may cause some people to switch their jobs. 4.

What are non-monetary characteristics of specific jobs?

Non-monetary characteristics of specific jobs – include factors such as the risk with different jobs, the requirement to work anti-social hours or the non-pecuniary benefits that certain jobs provide including job security, working conditions, opportunities for promotion and the chance to live and work overseas, employer-provided in-work training, employer-provided or subsidised health and leisure facilities and other in-work benefits including occupational pension schemes.

Why are wages higher?

1. The real wage rate on offer in the industry itself – higher wages raise the prospect of increased factor rewards and should boost the number of people willing and able to work

Why is migration important in the UK?

A rising flow of people seeking work in the UK is making labour migration an important factor in determining the supply of labour available to many industries – be it to relieve shortages of skilled labour in the NHS or education, or to meet the seasonal demand for workers in agriculture and the construction industry.

What factors affect the supply of labour?

All things being equal, higher wages, will make a particular occupation more desirable. Students are more likely to choose a high paying profession than low-paying profession. Non-wage factors.

What are non-wage factors?

However, wages are not the only factor that will influence the choice of occupation, there are also non-wage factors which influence how attractive a job is, such as: Qualifications and skills required. Often the highest paying jobs require challenging qualifications. For example, a lawyer is highly paid.

Why is the supply curve S1 more inelastic?

Higher wages are required for people to supply their labour. This could be for two factors: S2 occupation is more attractive due to non-wage factors – e.g. enjoyable, whilst S1 is dangerous and unpleasant. Or it could be due to differences in qualifications required.

What are some examples of cultural expectations?

For example, in coal-mining/ship-building areas/, young people may wish to follow their parent’s career and also work in the same industry. Some jobs may have a gender bias. For example, traditionally women were more likely to enter the nursing profession, whilst men were more likely to become doctors.

What are the factors that influence the supply of labour?

Two factors that influence a workers supply of labour. 1. Substitution effect of a rise in wages. With higher wages, workers will give greater value to working than leisure. With work more profitable, there is a higher opportunity cost of not working. The substitution effect causes more hours to be worked as wages rise.

Why is the supply curve for labour upwardly sloping?

A look at factors that determine an individuals supply of labour and the market supply of labour. Higher wages usually will encourage a worker to supply more labour because work is more attractive compared to leisure. Therefore the supply curve for labour tends to be upwardly sloping.

How does immigration affect demand for labour?

Effect of increase in supply and demand for labour. If immigration led to an increase in the supply of labour (more workers) then wages would initially fall. However, net migration would also lead to increase in demand for labour because the new workers create additional demand in the economy.

What would happen if the supply of economics teachers rose?

If it is difficult to get particular qualifications, supply will be inelastic. For example, even if wages of economics teachers rose, the supply would be quite inelastic – to become qualified would take several years.

How are wages determined in a competitive labour market?

In a perfectly competitive labour market, wages are determined by supply and demand (We). For an individual firm, the supply of labour is perfectly elastic. They are wage takers and employ workers at the market wage of We.

What happens if many jobs in a local area are considered unpleasant?

If many jobs in a local area are considered unpleasant – e.g. fruit pickers, then the supply of alternatives will be relatively higher.

Why do people work less?

This occurs when an increase in wages causes workers to work fewer hours. This is because workers can get a higher income by working fewer hours. Therefore they may work less.

Why do people supply labor?

People supply labor in order to increase their utility— just as they demand goods and services in order to increase their utility. The supply curve for labor will shift in response to changes in the same set of factors that shift demand curves for goods and services.

How does the demand for leisure play a role in understanding the supply of labor?

Two aspects of the demand for leisure play a key role in understanding the supply of labor. First, leisure is a normal good. All other things unchanged, an increase in income will increase the demand for leisure. Second, the opportunity cost or “price” of leisure is the wage an individual can earn. A worker who can earn $10 per hour gives up $10 in income by consuming an extra hour of leisure. The $10 wage is thus the price of an hour of leisure. A worker who can earn $20 an hour faces a higher price of leisure.

How does substitution affect labor supply?

The individual will continue to make the substitution until the two sides of the equation are again equal. For a worker, the substitution effect of a wage increase always reduces the amount of leisure time consumed and increases the amount of time spent working. A higher wage thus produces a positive substitution effect on labor supply.

What would any one individual's supply curve for labor look like?

What would any one individual’s supply curve for labor look like? One possibility is that over some range of labor hours supplied, the substitution effect will dominate. Because the marginal utility of leisure is relatively low when little labor is supplied (that is, when most time is devoted to leisure), it takes only a small increase in wages to induce the individual to substitute more labor for less leisure. Further, because few hours are worked, the income effect of those wage changes will be small.

Why are supply curves sloping?

It is quite likely that some individuals have backward-bending supply curves for labor—beyond some point, a higher wage induces those individuals to work less, not more. However, supply curves for labor in specific labor markets are generally upward sloping. As wages in one industry rise relative to wages in other industries, workers shift their labor to the relatively high-wage one. An increased quantity of labor is supplied in that industry. While some exceptions have been found, the mobility of labor between competitive labor markets is likely to prevent the total number of hours worked from falling as the wage rate increases. Thus we shall assume that supply curves for labor in particular markets are upward sloping.

What is demand for labor?

The demand for labor is one determinant of the equilibrium wage and equilibrium quantity of labor in a perfectly competitive market. The supply of labor, of course, is the other. Economists think of the supply of labor as a problem in which individuals weigh the opportunity cost of various activities that can fill an available amount ...

How many units of utility is $1 worth of leisure?

Then MULe / W equals 20/10, or 2. That means that the individual gains 2 units of utility by spending an additional $1 worth of time on leisure. For a person facing a wage of $10 per hour, $1 worth of leisure would be the equivalent of 6 minutes of leisure time.

What will cause the market labour supply curve to shift?

any change in non-monetary factors will cause the market labour supply curve to shift

Why do firms pay wages to workers?

firms pay wages to workers to supply their labour to produce goods and services

What is supply curve?

the supply curve for labour shows the relationship between the wage rate and number of workers willing to work in an occupation

Can fewer people switch occupations?

fewer people can easily switch into occupation following change in real wage