economics A2 MICRO - wage determination

Question	Answer
wages are determined by ...	- demand for labour- productivity , increases in the price of capital leading to a substitution of capital for labour -supply- number of workers , working conditions making a particular industry more attractive
monopsonist	a monopsonist is able to exploit market power and therefore able to force down wage levels. diagram.
trade union	an individual is likely to be in a relatively weak bargaining position compared to their employer. there is asymmetric information in the form of profitability, and labour regulation. trade unions increase bargaining power by bringing workers together. fix a minimum price for labour. theory suggests trade union increase price and create unemployment. diagram
power of trade union	- trade union membership and militancy - greater cost for the employer - the demand curve for labour is relatively inelastic or elastic - profitability of employer diagram of bilateral monopoly, when a single buyer faces a single seller
factors	- working environment- for example the danger of working in a mine may not attract as many workers. supply is low. -trade union memberships - globalisation- downward pressure on low skilled wages -migration - technologies- lost jobs -decline of primary and secondary industry - government policy to tackle inequality - wage based on gender -age - part time vs full time - region- London has high levels of wages, higher living costs, better educational attainment

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	Created by Hari Kumarakuruparan about 6 years ago