Participation rate: The proportion of the population of working age who are employed or looking for work.
Real wages The purchasing power of wages / it measures the amount of goods and services the worker can buy with the money wage.
Labour Productivity The output per worker per period of time e.g. per week. Discuss the factors that impact on the supply of labour.
The average number of hours worked per week// Backward bending supply of labour / wage levels in other countries There is a strong relationship between wage rates and the number of hours which people are willing to work. Higher wage levels in recent years act as an incentive for more people to supply their labour. For some workers as wage levels increase they may prefer increased leisure and reduce their supply.
High marginal tax rates May inhibit the supply of labour. High tax rates act as a disincentive to the supply of labour if workers feel they are being taxed too much they may reduce the number of hours worked.
Government regulation / policies i.e. social welfare payments The raising of the minimum wage rate recently may encourage more people to seek employment. The comparative size of social welfare payments; if perceived as being generous, fewer people may be encouraged to seek employment.
Participation Rate The proportion of the active age group who are in the labour force. If the participation rate increases the supply of labour increases. Any factors that may affect the participation rate affect the supply of labour: level of pensions available; attitudes to work e.g. attitudes towards women working in certain jobs; improved job security may encourage people to stay working.
Labour mobility The greater the mobility of labour (geographic and occupational) the greater the supply of labour in an economy. Provision of more information on vacancies or job availability may allow workers to move so the supply of labour will increase.
Migration levels The government is currently trying to attract Irish emigrants back to Ireland. If successful, this will affect the supply of labour. Immigration levels into Ireland also affect the supply of labour.
Outline two challenges currently facing the Irish labour market and state one appropriate government policy response for each challenge identified.
Excess supply of labour Different segments of the labour market have different rates of unemployment. Currently Ireland is experiencing a high rate of youth unemployment. Those in long term unemployment find it very difficult to find employment etc.
Government Response Provision of (re) training where skill shortages exist. Help people search for jobs and try to match a person with job available. Employ workers directly e.g. build social housing Subsidise private sector employment.
Excess demand for labour Possible labour shortages may make it difficult for firms to meet production targets. Wage demands. Where shortages are occurring employers may be forced to increase wage rates to keep the existing workforce. Shortages exist in the health, construction, IT and hospitality sectors etc.
Government Response Open up the Irish labour market: more efficient visa system. Encourage emigrants to return home. Provide more attractive working conditions / wages to encourage graduates in certain occupations to work in Ireland and not go abroad.
Attached are the Factors of Production Questions for Christmas Test