Labour Market Elasticities

10 flashcards · Economics · by Addaneye

1. What is labour elasticity of demand?

   The responsiveness of a change in demand for labour to a change in wages

2. What three factors affect labour demand?

   Substitutes % of total cost Time

3. How does availability of substitutes affect labour elasticity of demand?

   Easy to substitute >> elastic demand Hard to substitute >> inelastic demand

4. How does % of total costs affect labour elasticity of demand?

   Wages are a small % >> inelastic demand Wages are a large % >> elastic demand

5. How does time affect of labour elasticity of demand?

   Short run >> no time to find substitutes >> inelastic demand Long run >> enough time to find substitutes >> elastic demand

6. What is labour elasticity of supply?

   The responsiveness of a change in supply of labour to a change in wages

7. What three factors affect labour supply?

   Skills and qualifications Unemployment Time

8. How do skills and qualifications affect labour supply?

   Highly skilled jobs >> inelastic supply Low skilled jobs >> elastic supply

9. How does unemployment affect labour supply?

   High unemployment >> supply is responsive >> elastic supply

10. How does time affect labour supply?

    Short run >> supply is unresponsive >> inelastic supply