Labour market failure
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?- Created by: Abbie
- Created on: 18-04-13 20:31
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- Labour market failure
- Unemployment
- not producing on PPP-not productively efficient.(waste of scarce resources)
- Markets not clearing due to; cyclical (disequil.); classical (WR above equil.=surplus S of L); or NAIRU
- Segmented labour markets
- division of labour into segments- each segment offers something different for a worker
- Stops workers meeting D for L in other segments
- division of labour into segments- each segment offers something different for a worker
- Immobility of labour
- EG mining decline- high OCC. immobility as narrow skills set
- Abuse of labour market power: monopsony/ monopoly
- Sole buyer of labour= affects demand for L= WR lower than in PC market (not in Equil.)
- Trade Unions
- push WR up=less D for L and excess S of L= unemployment for non union members 9BUT DEPENDENT ON TYPE OF MARKET STRUCTURE OPERATING IN)
- Discrimination
- leads to inefficient allocation of resources and inequitable wage differential
- Skills shortages
- D for L cant be met- More skilled labour (inelastic)=more likely to occur
- Result=vacancy filled with less efficient, unskilled workers
- D for L cant be met- More skilled labour (inelastic)=more likely to occur
- Imperfect info.
- leads to workers accepting WR they percieie as fair- not nec. equil. WR
- Reslources=not efficiently allocated as wokers not aware of all job vacancies
- Unemployment
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