What Is Meant By The Derived Demand For Labour Why Is The Labour Market Regarded As A Factor Market?

766 words - 3 pages

Labour is the human element in the production process. It is the intellectual and physical effort of people in production. The labour market is a factor market where the demand and supply of labour interact to determine the wage rate and the allocation of labour resources in the economy.The demand for labour is derived form the demand for the goods and services that labour is used to produce. The demand for labour is influenced by the level of economic activity, the productivity of labour and relative cost of labour compared to capital. Supply of labour refers to proportion of wrking age population making itself available for work. In a competitive labour market, the interaction of the demand and supply for labour will determine wage rates and the allocation of labour resources.The Demand and supply of labour are influenced by both macroeconomic and microeconomic factors. Macroeconomics refer to conditions in the whole economy affecting the general labour market. Microeconomic factors include specific industry and firm conditions that influence the demand and supply of labour for particular occupations and labour skills.The demand for labour at a microeconomic level are influenced by a number of factors that are industry or firm specific, these include the nature and size of the industry, the pattern of consumer demand and output, the wage rate and conditions of employment offered, the productivity of labour, the rate of capital/labour substitution and the rate of structural change and entrepreneurial expectations.Large labour intensive industries such as TCF's and service are usually big users of labour. Traditionally industries like mining and building were labour intensive jobs but in developed countries these industries have turned to being capital intensive industries. The nature of an industry's output also influences the quality of labour demanded; for e.g. professional and unskilled worker.Since the demand for labour is derived form the demand for final goods and services a change in the pattern of consumer demand will affect the demand for labour. A decline in the demand for wool may lead to less wool workers being employed.The wage rate and conditions of employment offered in industries affect the demand for labour. More profitable industries with job security and future prospects attract labour by offering higher wages and fringe benefits. Less profitable industries...

Find Another Essay On What is meant by the derived demand for labour why is the labour market regarded as a factor market?

Why is perfect competition sometimes regarded as an ideal market structure and why does Samuelson write that it doesn't faithfully represent the facts about modern industry?

545 words - 2 pages Perfect competition sometimes is regarded as an ideal market structure because itsupports the actual ideology of a free market economy where, for example there is no government intervention. The entrepreneur in perfect competition works independent of other entrepreneurs and each individual buyer or seller does not influence the market, there are perfect substitutes for all goods and the demand is perfectly elastic, hence there is no price rise

Labour Market Need Essay

979 words - 4 pages The oft-repeated explanation for these outcomes is a labour market need for migrant workers to fill jobs that indigenous workers reject (Fellini et al., 2007; Massey et al., 1998; Piore, 1979). However, this is not a spontaneous process and it is important to recognize the role played by labour market actors, particularly employers (or their agents) and the state (Bach, 2007; Rodriguez, 2004). Employers engage in active recruitment

What are the shortcomings of the Neo-classical description of the labour market exchange, which is based on the notion of the price mechanism?

798 words - 3 pages -classical description is very idealistic. It is far too simple (not in writing!!) to be a true reflection of the labour market. There are too many areas not covered by the description. These areas are too important to be overlooked. The Neo-classical description is based almost entirely on financial gain and would be better suited to a 19th Century market place than to a 21st century market place. To describe the labour market as a simple Supply and Demand system is wrong, labour is not a commodity to be traded, it is people and not just as factor of production.

Outline the changes in the Australian labour market since 1980

4539 words - 18 pages Outline the changes in the Australian labour market since 1980. What impact do you consider that these changes have had on the industrial relations system in Australia?Industrial relations can be defined as the government regulated interaction between employers and their representatives with employees and their representatives in pursuit of their respective objectives. It interacts between management and the employees. There are a variety of

Labour Market Inflexibility in Europe

1196 words - 5 pages discussed. The general view seems to be that the US has a more dynamic economy, people tend to believe Europeans are worse off than Americans. The main reason given for Europe lagging behind the USA economically is “Labour market inflexibility” other reasons why the European Economy is not as dynamic, include labour rigidities, high taxes, and too big an emphasis on the welfare system. This essay will discuss why US labour markets are

Women in Canadian Labour Market

1804 words - 8 pages of increasingly more female CEO is continuing as shown by the following diagram (Women CEOs of the Fortune 500, 2013). Along with the barrier of work-life balance, there is also the notion of lack of faith in females. Business has been a male-dominated industry (Rapacioli, 2010) and considered “a man’s world” for generations. A woman as President or CEO of a company, for many men and shareholders presents a statistical concern (Gay, 2013

How Wages are Determined in a Perfectly Competitive Labour Market

1747 words - 7 pages would mean a higher price. This in turn would give a higher wage rate as wage is determined by MRP which is MPP(marginal physical product X price). The demand for labour is a derived demand. This means it is decided by how another factor changes e.g. if the demand for a product increases, the demand for labour in that field will increase. If demand for a product increases, this means a higher price and a higher

Minimum Wage and Demand for Labour

1396 words - 6 pages particular position is the mathematical "mean" of the wages of all people employed in that position. This number is calculated by adding up all the wages of people working in the position and then dividing that sum by the number of people working in the position.” Wolfe,M(2013)  Equilibrium is a situation that opposing forces balance each other. It occurs when the demand and supply are same. For example, when drawn the curve, any one point where

History of Active Labour Market Policies

1235 words - 5 pages monitoring of job search is put into place along with some form of punishment or sanctions for people who do not comply with the terms of their job seeker benefits. Training programmes are seen as effective form of ALMPs as they provide people with the direct links for the job sector that is in more demand for a labour work force. The reason for the huge success in this type of AMLP scheme is due to the fact that there are a lot of area in the

Weather management can control all the factors influencing demand for and supply of labour

1361 words - 5 pages can be sure about the parts to be assembled into a whole hence the required demand.However, there some factors influencing demand for labour that cannot be controlled by management. One of such factors is the market demand for organization's products. For instance, due to the establishment of new markets and unexpected rise or fall of market demand for organization's products it can alter the demand patterns for labour in the organization because

Changes in the business environment and labour market affect Human Resource Planning (HRP)

1980 words - 8 pages being "out of the labour forces". Therefore this kind of unemployed people will not be the factor of unemployment rate measurement. Usually, the unemployment rate will be high during the recession of economy because the companies fire many people out. Thus, the demand for the workers of organizations is reducing but the supply of workers from the labour market is increasing. Labour force is an uncontrollable factor by HR planner because they can't

Similar Essays

The Labour Market Essay

838 words - 3 pages to secure for Australian produces a larger share of the domestic market for their output.As shown in the diagram below, the demand for labour will increase, causing an increase in wage rate and an increase in the employment of labour.As demand for labour is a derived demand, lower wages will reduce production costs for an individual business firm, lower wages will reduce production costs for an individual business firm. Lower wages also reduce the

Racism In The Labour Market Essay

2059 words - 8 pages a situation. Four people who witness a car accident will have four different perceptions of what happened and how it happened.Therefore it is possible to have a situation where two groups of people vehemently oppose each other, both objecting to the same piece of legislation on the grounds that it "gives more favorable treatment" to the other group.1.9 BEYOND THE KNOWN TRUTH...By most accounts, today's workplace is treacherous territory--for

Who Benefits And Who Loses When A Common Market For Labour Is Extended To More Countries

1948 words - 8 pages Who benefits and who loses when a common market for labour is extended to more countries? Explain your answer with reference to economic theory and to EU experience. Comment also on the future implications of the 2004 enlargement. Many people talk about the 'common market', by which they meant the European Economic Community in its early decades. Ths is a group of geographically close European nations among

Economics Essay The Australian Labour Market

1037 words - 4 pages reduces the quantity of employed workers. This method is somewhat inefficient and less effective now than it was in the past, as industrial relations laws and rules limit strikes and the restriction of labour. A more effective means of improving employees’ wages is by taking advantage of the numerous members of the union, and uniting to form a strong front against an employer. It is very difficult for an employer to replace an entire