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

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

3. 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

4. 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

5. 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