The labour market The determination of relative wage rates and levels of employment in imperfectly competitive labour markets

Factors determining wages Demand for labour Supply of labour Trade unions and professional organisations Government intervention (minimum wage legislation) Discrimination

The elasticity of demand for labour Wage rate/MRP Wage rate/MRP Where it takes time to hire and fire workers, or labour is hard to replace with capital, these workers are likely to be in high demand and in a strong bargaining position. They are likely to command a potentially high wage Where it is easy to hire and fire workers, or labour can be replaced with capital, these workers may be in demand, but not in a strong bargaining position. They are not likely to command a high wage D1 D1 Quantity of labour Quantity of labour

The elasticity of supply for labour Wage rate/MRP Wage rate/MRP Where it takes labour time to enter a market due to the skills, training or qualifications needed, or there exists a strong vocational element to the occupation , supply of such workers is likely to be short. They are likely to have much bargaining power and consequently command a high wage Where labour can enter the market quickly due to the lack of skills, training or qualifications needed, or there exists little or no vocational element to the occupation , supply of such workers is likely to be high. They will not to command much bargaining power and thus are likely to receive a low wage S1 S1 Quantity of labour Quantity of labour

Elasticity of demand and supply of labour and wage determination Wage rate/MRP Where it takes time to hire and fire workers, or labour is hard to replace with capital, these workers are likely to be in high demand and in a strong bargaining position. Where it takes labour time to enter a market due to the skills, training or qualifications needed, or there exists a strong vocational element to the occupation , supply of such workers is likely to be short. They are likely to have much bargaining power and consequently command a high wage. S1 Where it is easy to hire and fire workers, or labour can be replaced with capital, these workers may be in demand, but not in a strong bargaining position. Where labour can enter the market quickly due to the lack of skills, training or qualifications needed, or there exists little or no vocational element to the occupation , supply of such workers is likely to be high. They will not to command much bargaining power and thus are likely to receive a low wage. S1 D1 D1 Quantity of labour