As salam Alaikum to all.
I was just reading the revision notes and i think that these points are very important from MCQ's point of view, which are missing from the revision notes.
Factors affecting Demand for Labour:
1. Wage Rate:
Increase in wage decreases the demand or labour. This factor just causes a movement along the demand curve but does not shift it.
Factors that cause a shift:
2. Productivity of Labour:
Increase in productivity of labour leads to increase in profits of the firm, leading to expansion and more profits increasing the demand for labour and shifting the curve to the rightside.
Decrease in productivity of labour leads to decrease in profits of the firm, leading to contraction of profits, decreasing demand for labour and shifting the curve to the right side.
3. Price of the substitute factors:
If the price of substitutes goods (i. e Machines) decreases, demand for capital increases and demand of labour falls which moves the demand curve to the right side and causes increase in unemployment.
If the price of substitutes goods increases, demand for capital decreases and demand of labour increases which moves the demand curve to the right side and decreases unemployment.
4. Economic Conditions:
If the economic condition of the country is experiencing a boom, this will increase the aggregate demand of the economy, which would increase profits of the firm as well as prices, leading to extension of firms and increasing the demand of the labour, shifting its curve to right.
If the economic condition of the country is experiencing a slump, this will decrease the aggregate demand of the economy, which would decrease the profits of the firm as well as prices, leading to contraction of firms and decreasing the demand of the labour, shifting its curve to the left.
5. Nature of Technology:
If the technology is labour intensive, this will again increase in demand for labour shifting its curve to the right side.
If the technology is capital intensive, this will decrease the demand for labour and shifts its curve to the left side.
Supply of labour:
1. Wage rate:
Increase in wage increases the supply of labour and vice versa. This causes movement along the supply curve and does not shift it.
Factors that cause a shift:
2. Size of population:
Increase in size of population increases the supply of labour as more persons are available for the job which shifts the supply curve to the right side.
Decrease in size of population decreases the supply of laobur as now less people are available
for the job which shifts the supply curve to the left side.
3. Participation rate:
If there is increase in independent group of workers and women workers then participation rate increases leading to increase in supply curve and shifting the supply curve to the right side.
0-16 age of belongs to dependent group
17-65 age belongs to independent group
Above 65 belongs to dependent group
4. Retirement age:
Increase in retirement age increases the supply of labour and shifts it to the right side where as decrease in retirement age decreases the supply of labour and shifts it to the left side.
5. School leaving age:
Increase in the school leaving age, means that the persons study for a more longer period of time, this decrease the supply of labour and shifts it to the left side
Decrease in the school leaving age, increase the supply of labour and shifts it to the right side.
6. Net migration rate:
If immigration is more the emigration then supply of labour increases as more persons are available in the country to perform the job and supply curve shifts to the right.
If emigration is more than immigration, then supply of labour decreases as less persons are available in the country to perform the job and supply curve shifts to the left.
7. Mobility of labour:
If there is an increase in the geographical and occupational mobility then labour will be able to move more freely anywhere increasing the supply of labour shifting the supply curve to the right side.
If there is a decrease in the geographical and occupational mobility then labour will be able to move less freely and dcrease the supply of labour by shifting the curve to the left side.
I was just reading the revision notes and i think that these points are very important from MCQ's point of view, which are missing from the revision notes.
Factors affecting Demand for Labour:
1. Wage Rate:
Increase in wage decreases the demand or labour. This factor just causes a movement along the demand curve but does not shift it.
Factors that cause a shift:
2. Productivity of Labour:
Increase in productivity of labour leads to increase in profits of the firm, leading to expansion and more profits increasing the demand for labour and shifting the curve to the rightside.
Decrease in productivity of labour leads to decrease in profits of the firm, leading to contraction of profits, decreasing demand for labour and shifting the curve to the right side.
3. Price of the substitute factors:
If the price of substitutes goods (i. e Machines) decreases, demand for capital increases and demand of labour falls which moves the demand curve to the right side and causes increase in unemployment.
If the price of substitutes goods increases, demand for capital decreases and demand of labour increases which moves the demand curve to the right side and decreases unemployment.
4. Economic Conditions:
If the economic condition of the country is experiencing a boom, this will increase the aggregate demand of the economy, which would increase profits of the firm as well as prices, leading to extension of firms and increasing the demand of the labour, shifting its curve to right.
If the economic condition of the country is experiencing a slump, this will decrease the aggregate demand of the economy, which would decrease the profits of the firm as well as prices, leading to contraction of firms and decreasing the demand of the labour, shifting its curve to the left.
5. Nature of Technology:
If the technology is labour intensive, this will again increase in demand for labour shifting its curve to the right side.
If the technology is capital intensive, this will decrease the demand for labour and shifts its curve to the left side.
Supply of labour:
1. Wage rate:
Increase in wage increases the supply of labour and vice versa. This causes movement along the supply curve and does not shift it.
Factors that cause a shift:
2. Size of population:
Increase in size of population increases the supply of labour as more persons are available for the job which shifts the supply curve to the right side.
Decrease in size of population decreases the supply of laobur as now less people are available
for the job which shifts the supply curve to the left side.
3. Participation rate:
If there is increase in independent group of workers and women workers then participation rate increases leading to increase in supply curve and shifting the supply curve to the right side.
0-16 age of belongs to dependent group
17-65 age belongs to independent group
Above 65 belongs to dependent group
4. Retirement age:
Increase in retirement age increases the supply of labour and shifts it to the right side where as decrease in retirement age decreases the supply of labour and shifts it to the left side.
5. School leaving age:
Increase in the school leaving age, means that the persons study for a more longer period of time, this decrease the supply of labour and shifts it to the left side
Decrease in the school leaving age, increase the supply of labour and shifts it to the right side.
6. Net migration rate:
If immigration is more the emigration then supply of labour increases as more persons are available in the country to perform the job and supply curve shifts to the right.
If emigration is more than immigration, then supply of labour decreases as less persons are available in the country to perform the job and supply curve shifts to the left.
7. Mobility of labour:
If there is an increase in the geographical and occupational mobility then labour will be able to move more freely anywhere increasing the supply of labour shifting the supply curve to the right side.
If there is a decrease in the geographical and occupational mobility then labour will be able to move less freely and dcrease the supply of labour by shifting the curve to the left side.