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Lecture notes 3.5.2 Wage Rates
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These notes helped me get an A* in A Level Economics, covering all aspects of the specification, plus hints of real world context.
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3.5.2 Wage RatesThe Demand of labour
Demand for products
o More demand for products means more demand for labour
Productivity of labour
o The more productive a work the higher the demand for them.
Can be increased with education and training.
Substitutes for labour
o Can be replaced by cheaper capital
o Means that labour will fall
Shift demand curve to left.
How profitable the firm is
o Higher the profits the more labour they can afford to employ
The number of firms in the market
o Determines how many buyers of labour there are.
NHS demand for labour is lower as it is a skilled profession
Supply of labour = No of workers willing and able to work at the current wage X no of hours they
can work.
When the wage rate changes but the quantity of labour stays the same there is a shift in
demand.
The Supply of labour
Supply cure shows proportional relationship between the wage rate and the quantity of labour
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