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Economics IGCSEPDF 61
118 pagesrevision 46932
PDF 61
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●
●
If an occupation
requires less time or cost for
training, the pool of suitable
workers increases. SL
increases (shifts right).
Wage Determination
● The
and
level of employment are determined
where the
in
a free market.
Relationship with Wage: Directly
related. As the wage rate rises, the
quantity of labour supplied rises
because more people are
encouraged to enter the market or
choose that specific occupation.
Shifts in the Supply Curve:
○ Improvements in
Non-Wage Factors: If
working conditions, job
security, or holidays improve,
the job becomes more
attractive. SL increases
(shifts right).
○ Increase in Size of Working
Population: Due to natural
population growth or net
immigration. SL increases
(shifts right).
Reduction in
Training/Qualifications
○
○
Differences in wages exist between different
occupations and individuals.
● Skills, Training, and
Qualifications: Jobs requiring high
skills, long training, or scarce
qualifications have a lower supply
of labour (SL shifts left), leading to
higher wages.
● Non-Wage Factors: Jobs with
unattractive non-wage factors (e.g.,
dangerous, dirty, irregular hours, low
job security) must offer higher
wages to compensate workers
(compensating differentials).
● Labour Mobility: Occupations or
regions with low occupational or
geographical mobility restrict the
supply of labour, leading to higher
wages compared to occupations
where labour is highly mobile.
● Productivity: Workers who are
more productive (generate more
revenue for the firm) can command
higher wages.
● Trade Union Strength: Workers
belonging to a strong trade union
can use collective bargaining to
Required:
equilibrium wage rate
demand for labour (DL)
equals the supply of labour (SL)
Reasons for Wage Differentials