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Economics-A-level-Aqa

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  1. 1-economic-methodology-and-the-economic-problem
    4 主题
  2. 2-individual-economic-decision-making
    4 主题
  3. 3-price-determination-in-competitive-markets
    10 主题
  4. 4-production-costs-and-revenue
    11 主题
  5. 5-perfect-and-imperfectly-competitive-markets-and-monopolies
    12 主题
  6. 6-the-labour-market
    7 主题
  7. 7-income-and-wealth-distribution
    4 主题
  8. 8-the-market-mechanism-market-failure-and-government-intervention
    16 主题
  9. 9-measuring-macroeconomic-performance
    5 主题
  10. 10-how-the-macroeconomy-works
    6 主题
  11. 11-economic-performance
    8 主题
  12. 12-financial-markets-and-monetary-policy
    6 主题
  13. 13-fiscal-and-supply-side-policies
    5 主题
  14. 14-the-international-economy
    16 主题
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Monetary Considerations that Influence the Supply of Labour

  • The occupational choices of workers are influenced by a range of monetary and non-monetary factors, which are often held in balance when making decisions about where to work

  • Monetary factors are financial payments that workers receive for their labour

The Monetary Factors that Influence Occupational Choices

Factor

Explanation

Wages

  • An agreed amount of money/hour and is calculated directly from the number of hours worked

  • E.g. If a student works in a restaurant for 6 hours, 5 days a week and he/she gets paid $10/hour, the weekly wage is $300 (6x5x$10)

Salary

  • Employment contracts often state the agreed-upon annual salary the employee will receive

  • This is then divided by 12 and paid monthly (in the USA it is divided by 24 and paid every 2 weeks)

  • The hours worked monthly may vary but the pay received is always the same

Commission

  • Often used as payment to sales people

  • It is typically a percentage of the value of the transaction involved e.g. estate agents receive 3-7% of the selling price of any property they sell

  • This can motivate employees to maximise sales

Bonus

  • Money paid in addition to a salary and is usually single annual payment

  • Often paid when the company earns high levels of profits, or as a reward for exceptional worker performance

Piece rate pay

  • A fixed amount paid to the employee for each completed item produced e.g. 25 Rupees paid to workers in India for each pair of socks they produce

Performance related pay (PRP)

  • Payment based on how well the worker performs

  • Workers doing exactly the same job may receive different compensation based on different outcomes they achieve

Share options

  • Payment through the issuing of shares in the company the employee works for

  • This is usually in addition to a monthly salary

  • The monetary value of the shares provided to the employee can be calculated on any given day as: number of shares x share price

Fringe benefits

  • Benefits provided in addition to the normal salary

  • They can be significant in influencing occupational choices

  • Includes benefits such as such as childcare, free lunches, gym membership, company car

Non-monetary Considerations that Influence the Supply of Labour

  • Non monetary factors can prove to be powerful motivators in convincing households to supply their labour to the market

  1. Length of training or level of education required: The longer the time period required to study or train for a job, the fewer the number of people who seek employment in that occupation, e.g. it usually takes seven years to become a lawyer

  2. Job security: Employment contracts in different industries have different time periods attached to them. Some contracts are one to four years in length, so they provide high security, e.g financial sector contracts. Others have a short notice period, and the employee can be dismissed with a very short notice period, e.g. 30 days
     

  3. Job satisfaction: Finding fulfilment in a job role and enjoying work is a significant part of generating job satisfaction. Workers will often change their jobs or careers so as to improve their job satisfaction
     

  4. Career prospects: Jobs with a defined pathway for promotion (and salary increases) are often more desirable

  5. Level of challenge: Many workers step into an occupation due to the challenge of the role, e.g. firefighters

  6. Status: Some jobs carry a higher level of recognition in society which workers find appealing, e.g doctors, surgeons and lawyers

  7. Work/life balance: Households will be ore likely to offer their labour if they know they will maintain a healthy work/life balance. The rise of ‘work from home; and hybrid working has increased labour supply in some markets

The Supply Curve for Labour

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

    • The SL shows that more labour supplied as the wage rate increases, which results in an upward sloping supply curve

Diagram: Market Supply Curve for Labour 

Graph showing labour supply curve (S_L), with wage rate (£) on the y-axis and quantity of labour on the x-axis. Points marked are (W_1, W_2, Q_1, Q_2).
There is a positive relationship between supply of labour and wage rate 

Diagram analysis 

  • The hourly wage rate increases from W1 to W2

    • There is an incentive for workers to supply more labour from H1 to H2

  • There is a positive relationship between market supply of labour and wage rate

    • The higher the wage rate, the higher the supply of labour in that occupation (and vice versa)

Factors that Shift the Supply Curve for Labour

  • There are numerous factors that influence the amount of labour supplied to a particular industry

    • The supply curve is the market supply of labour, not the individual supply of labour

Factors Influencing the Supply of Labour

Training period

Wages in other occupations

Changes in migration policy

  • Long training periods (and their costs) act as a barrier to entry and exclude many households from offering labour in certain markets

 

  • Comparative wage rates in substitute labour markets strongly influence the supply of labour; e.g. it is getting harder to recruit economics teachers as the private sector offers higher wages for their skills

  • Policies that increase the [popover id=”qJhTWXok-ejO4dOy” label=”net migration rate “] increase the supply of labour to certain industries, e.g. in 2022, 36% of Singapore’s labour force were migrants

Income tax levels

Working conditions

Trade union power

At a certain level, income taxes become a disincentive to households offering their labour. The assumption is that as income tax increases, labour supply decreases – and vice versa

The working conditions & non-wage benefits can act as strong incentive in certain industries e.g. tech companies are well known for their laid-back work environment & wide range of benefits e.g. on-site childcare & restaurants

Trade unions can increase the supply of labour to certain industries as workers consider the benefits of belonging to the union e.g higher wages & a safer working environment

Level of welfare benefits

Social trends

 

  • The higher the level of welfare benefits, the lower the incentive for low-skilled labour to offer their labour, and vice versa

  • Social trends include any major changes within society and can influence the supply of labour to certain industries e.g. work from home during Covid resulted in significant changes to the labour market and not all workers returned to work when economies opened up again

 

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